Survey: Fear of Debt Won’t Stop Millennials from Spending More This Holiday Season

A new survey by Credible.com finds that millennials are planning as much or more on holiday shopping this year than they did last year, despite their growing fear of credit card debt.

To better understand how millennials think about budgeting, credit card debt, and spending around the holidays, we polled 500 18-34 year-olds in the U.S. who carry credit card debt.

Key takeaways

  • More than 70% of millennials plan to spend as much or more than they did last year, while only 30% said they plan to spend less.
  • Even though most respondents know they’ll spend as much or more than last year, nearly half of them (47.8%) don’t seem to have a budget.
  • Eight out of ten respondents (81%) who plan to spend money holiday shopping don’t intend to borrow money, or will repay new credit card debt right away. More than half (52.2%) will pay for their purchases with debit cards or cash.
  • However, a very small segment of millennial holiday shoppers (6.2%) say they plan to dig into their savings to pay for their gifts.

Haunted by the ghost of Christmas Present(s)?

More than 70% of respondents surveyed said that they planned to spend just as much or more on holiday shopping than they did the previous year.
This is despite that fact that an overwhelming number of respondents stated that credit card debt was the biggest fear in their lives, even scarier than the threat of war, or even death.

Worryingly though, budgeting seems overlooked, as less than half of all respondents said they know how much they plan to spend on shopping this year.

Creating and even sticking to a budget won’t make you immune to holiday debt — we all know how those little, last minute purchases can add up. But it’s crucial to set a limit for yourself before you hit the stores.

Because if you don’t…

We know what you’re getting for Christmas this year

It’s debt.

Debt seems to have become part and parcel of holiday shopping, with 16% of millennials planning to lean on their credit cards to finance their spending.

But it’s not all doom and gloom — eight out of ten (81%) respondents who plan to spend money holiday shopping seem to be shying away from borrowing, and plan to pay it off immediately if they do.

But wait…there’s myrrh

7.2%

The percentage of millennials who plan to withdraw from savings our take out a personal loan to pay for their holiday shopping

So intent are millennials on getting their holiday shopping done that more than 7% of millennials surveyed plan to dip into their savings, or even take out a personal loan, in order to pay for their Christmas purchases.

Needless to say, this is probably not the best idea, especially if you already have credit card debt, as all of our respondents do.

Sleighing your debt

It’s easy to get carried away during the holidays. But your credit card debt doesn’t have to sound the death knell for those sweet holiday deals you’re itching to take advantage of. These tips can help you keep your spending on track.

  • Set a (realistic) spending limit: Different strategies will work for different people. Some people do best at by setting individual budgets for each person on their gift list; others might find it easier to set a maximum amount for themselves and figure it out from there. But the most important thing to remember is that having some plan is better than not having one at all.
  • Carry cash: If you’re already struggling with credit card debt and you find it difficult to resist temptation, just carry cash. Withdraw the amount that you can afford to spend and leave your credit cards behind. This will force you to think about your budget and help you stay away from those impulse buys.
  • Take advantage of holiday sales: Planning is key if you want to get the best prices this holiday season. Make a list of potential gift items and start tracking them early. You can find some great discounts during Thanksgiving, Black Friday and Cyber Monday sales.
  • Prioritize paying off credit card debt: If all else fails, and you end up accruing some credit card debt, make a conscious effort to pay it off as quickly as possible. Carrying a balance on your credit card(s) can rack up your fees and interest costs and negatively impact your credit score

Methodology

We obtained this data by surveying 500 adults ages 18 to 34 who have credit card debt, and asking them the following questions:

  • Do you plan on spending more, the same, or less on holiday shopping this year than you did last year?
  • Do you know how much you plan to spend on holiday shopping this year?
  • How do you plan to pay for your holiday shopping this year?

The survey was conducted through Pollfish on October 24, 2017 as part of a study to illustrate millennials’ holiday spending behaviors.

Debunking the Left’s Myths on Net Neutrality

The end of the world is nigh.

That at least is the message being spread by last-ditch defenders of the Obama-era “network neutrality” rules, which Federal Communications Commission Chairman Ajit Pai has scheduled for elimination later this month.

The imminent repeal of these rules has sent red tape supporters into rhetorical overdrive. The internet as we know it is threatened, they say, as is democracy itself, with the digital world descending into a nasty, brutish, and unregulated existence.

Don’t believe it. Imposed in 2015 by the Obama-era FCC, these rules richly deserve to be tossed.

Based on public utility-style regulatory schemes from the days of Ma Bell’s monopoly, net neutrality prohibits internet service providers (such as Verizon and Comcast) from offering differentiated service to content providers (such as Google and Facebook) using their networks.

In other words, every bit and byte must be handled the same as every other bit and byte.

This sounds fair enough, until you look at what such government-enforced equality means in real life.

First, discounted and premium service offerings—essential elements of just about every functioning market in the U.S. economy—are banned. Imagine a law that says you have to pay sticker price for a new car, and you’ll get the idea.

But wait, there’s more. The internet is a complex place, and that is reflected in the rules.

Network efforts to provide security or intellectual property are OK if “reasonable.” Network-to-network traffic is not covered, nor is cable television programming.

A “general conduct” provision bans other disfavored activity not explicitly listed, on a case-by-case basis. No definition is provided, and everything from caps on the data you use to free content on your cellphone have been suggested as practices to ban. All you have to do is ask the FCC for permission in advance.

The commission could not have found a surer way to discourage innovation if it tried.

Investment in broadband—which had been the largest of any industry—has also taken a beating, going down for the first time ever in a non-recession year.

But what of the dire warnings of the supporters of net neutrality? Without neutrality regulation, big internet service providers will increase costs and drive little firms out of the market, the rule’s defenders say.

Similarly, supporters argue that big firms could use their market power to stifle political views with which they disagree.

But there is no evidence such anti-competitive behavior ever took place before the present rules were adopted in 2015. Moreover, the largest (and presumably most dangerous) firms in the world, including Google and Facebook, are leading advocates of neutrality regulations.

The proponents of regulation, in fact, have the effects of enforced neutrality exactly backward. Rather than driving new small players out of the market, differentiated service gives these small players a means by which to compete with their larger rivals.

The best way to compete is to offer something your competitor does not. Premium services or low-cost services can provide that edge. A website might optimize its business with premium broadband connections, or cut its costs with bare bones internet service. But the FCC neutrality rules take away that possibility, further entrenching big content providers in place.

Lastly, it should be noted that elimination of neutrality rules will not leave the broadband marketplace unregulated. Rather, the marketplace for broadband will be regulated by the same rules that apply to most other parts of the economy: antitrust. The antitrust laws, while not perfect, can provide an important backstop should any anti-competitive practices take hold.

Americans should ignore the Chicken Little squawking of neutrality supporters. The real threat to the internet comes not from too little government interference in its management, but from too much.

COMMENTARY BY

Portrait of James Gattuso

James Gattuso handles regulatory and telecommunications issues for The Heritage Foundation as a Senior Research Fellow in its Roe Institute for Economic Policy Studies. Read his research. 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.

SUPPORT THE DAILY SIGNAL

EDITORS NOTE: The featured image is of a man protesting outside the Los Angeles federal building ahead of a December FCC vote to roll back net neutrality rules. (Photo: Jim Ruymen/UPI/Newscom)

In 1 Chart, the Differences Between the House and Senate Tax Reform Bills

The House and Senate have now each passed different versions of Tax Cuts and Jobs Act.

Both bills are a big improvement to America’s out-of-date tax code and could boost the economy by almost 3 percent, leading to more jobs and higher wages for working Americans.

Both bills cut taxes for individuals and businesses, largely repeal the state and local tax deduction, and allow businesses to invest more in the American economy through temporary expensing.

The bills now head to a conference committee where a unified bill will be crafted. Here are some of the major differences you need to know about:

In addition to these differences, the House bill repeals or scales back many credits and deductions that are largely left intact by the Senate.

For example, the House bill caps the mortgage interest deduction for future home buyers; repeals the deductions for medical expenses, private activity bonds, and student loan interest; and eliminates credits for historic rehabilitation, energy production, and orphan drugs. The Senate largely leaves each of these provisions intact.

The conference committee has a tough, but doable, job ahead of it. It has the opportunity to borrow the best components of each bill to further enhance the proposed reforms’ benefits for all Americans.

COMMENTARY BY

Portrait of Adam Michel

Adam Michel focuses on tax policy and the federal budget as a policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Twitter: .

RELATED ARTICLE: These 229 Businesses and Groups Support Tax Reform

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.

The Obamacare Mandate Is a Tax, So the Senate Bill Is Correct

The Supreme Court saved the program by calling it a tax. It should be repealed like a tax.

Jeffrey A. Tucker

by  Jeffrey A. Tucker

The Washington Post is outraged. The New York Times even more so.

Commentators are going nuts.

“Using a tax bill to abolish the individual mandate amounts to a backdoor way of sabotaging Obamacare,” writes John Cassidy.

“Republicans, and Donald Trump, have counted on that (as well as your limited outrage bandwidth) in slipping an Affordable Care Act mandate repeal inside their insidious tax bill,” writes Bridget Read.

All this howling is due to how the GOP-controlled Senate used a tax bill to repeal a health bill. The implication is that this is something shady and duplicitous, like an exercise in false pretense.Actually, there is absolutely nothing shady about the repeal of the Obamacare mandate. There is no back door here. No bait and switch. Obamacare’s much-despised individual mandate is, in fact, a tax. It is properly dealt with in a tax bill.

Don’t take my word for it. This is precisely what the Supreme Court itself ruled in National Federation of Independent Business v. Sebelius (2012). It was widely seen as the ruling that codified Obamacare, giving it the constitutional gloss it needed to stay a law.

The law has been challenged on many grounds but one of which was that it is unconstitutional for Congress to force the people to purchase a service. The court said that this might not pass muster if that were what Congress was doing. Instead, ruled a 5 to 4 majority, the individual mandate should be considered a tax like any other. Taxes are permissible. Therefore Obamacare is completely fine.

Said the Court:

The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

Further:

It is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes.

To be sure, the ruling was a bit of an embarrassment for Obamacare proponents because they never liked to talk about the mandate as a tax. It was a payment for wonderful services. The Court said it is true that forcing people to buy something would contradict precedent. So in order to beat back the challenge, the majority found a clever way of redefining the nature of the mandate itself.

At this, Obamacare proponents, while a bit red faced, expressed relief. At least the legislation gets to stay, thanks to an ideologically driven court majority.

The Senate is merely deferring to what the court said and nothing more. The highest court in the land said that the mandate – which is the heart of the legislation – should be regarded as a tax. Fine. The Senate couldn’t repeal the bill in healthcare legislation. So they listened to the court and did exactly what they were supposed to do all along: treat the monstrosity as a tax in a tax bill.The people who are outraged today are only tasting their own medicine, nothing more.

Thus should the repeal be seen as another way in which this legislation is a tax cut for the American people. Will it destabilize health insurance markets? Yes and no. Without the mandate, Obamacare might not survive. But Obamacare is not a real market. It is a fake market. You know this because the many mandates effectively abolish market signaling.

What this tax repeal does is begin to let the market function again. True, there are many more reforms that are necessary to make health insurance work properly again. But this is a good beginning. And it was done entirely properly, precisely as the Supreme Court itself said it should be done.

Jeffrey A. Tucker

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, economics adviser to FreeSociety.com, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books, most recently Right-Wing Collectivism: The Other Threat to Liberty, with a preface by Deirdre McCloskey (FEE 2017). He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press. He is available for press interviews via his email.

Why Capitalism is a fundamental Right of Man

Thomas Paine wrote a book titled Rights of Man. The Rights of Man posits that popular political revolution is permissible when a government does not safeguard the natural rights of its people. The Rights of Man begins thusly:

To

GEORGE WASHINGTON

PRESIDENT OF THE UNITED STATES OF AMERICA

SIR,

I PRESENT you a small Treatise in defense of those Principles of Freedom which your exemplary Virtue hath so eminently contributed to establish.–That the Rights of Man may become as universal as your Benevolence can wish, and that you may enjoy the Happiness of seeing the New World regenerated the Old, is the Prayer of

SIR,

Your much obliged, and Obedient humble Servant,

THOMAS PAINE

Paine was addressing the Declaration of the Rights of Man and of the Citizen written in France after their revolution. The basic principle of the Declaration was that all “men are born and remain free and equal in rights” (Article 1), which were specified as the rights of liberty, private property, the inviolability of the person, and resistance to oppression (Article 2).

Capitalism is defined as:

A social system based on the principle of individual rights. Politically, it is the system of laissez-faire (freedom). Legally it is a system of objective laws (rule of law as opposed to rule of man). Economically, when such freedom is applied to the sphere of production its result is the free-market.

Therefore capitalism is a basic right of man or in more modern terminology a human right.

To take away one’s property is to take away their ability to survive. Take away a farmer’s land and you take away a farmer’s ability to reap what he has sown. The farmer can no longer feed his family nor sell what he has reaped to feed others. If the state (government) controls the dirt (land) then it controls the people.

This is what the American Revolution was all about. Unchaining the people from serfdom to the King of England. 

As Friedrich A. Hayek, in his book The Road to Serfdom wrote:

It is true that the virtues which are less esteemed and practiced now–independence, self-reliance, and the willingness to bear risks, the readiness to back one’s own conviction against a majority, and the willingness to voluntary cooperation with one’s neighbors–are essentially those on which the of an individualist society rests.

Collectivism has nothing to put in their place, and in so far as it already has destroyed then it has left a void filled by nothing but the demand for obedience and the compulsion of the individual to what is collectively decided to be good.

Capitalism is the opposite of obedience and compulsion.

Capitalism can exist even in the most repressive societies, such as in Communist Cuba. In my column My Visit to Cuba — An American in Havana I wrote:

What I observed is that the Cuban people have great potential if they are unleashed and allowed to earn what they are truly worth. Socialismo (socialism) is slowly but surely killing their lives and doing them great harm. I noticed on the ride West of Havana through the rural areas of Cuba hundreds of people waiting along the road trying to get a ride. Some were nurses in their white uniforms thumbing rides to the hospital where they are needed. I saw horse drawn carriages along the major highway carrying people because the public transportation system cannot keep up with the demand. The horses and cattle we saw were emaciated. The roads were in poor shape including the national highway system.

As one Cuban man put it, “the people have no love for their work.” They have no love for their work because Cuba needs a change in direction.

A love for work comes from the rewards of one’s efforts. Take that away and you remove the soul of the individual. You remove his purpose in life. You remove the one of the fundamental rights of man.

There are those who believe the polar opposite. There are those who believe that central control trumps individual freedom. There are those who are being taught that capitalism is evil, until the time that they must earn enough to feed themselves.

There was a time in America when there were only two classes of citizens, the working class and the non-working class. The working class took care of the non-working class. Economic classification is identity politics (a.k.a. Cultural Marxism) writ large. It is designed to put the poor (those earning below a certain wage determined by government) against the rich (those earning above a certain wage determined by the government).

During his inaugural address President Trump stated:

Today’s ceremony, however, has very special meaning. Because today we are not merely transferring power from one Administration to another, or from one party to another – but we are transferring power from Washington, D.C. and giving it back to you, the American People.

For too long, a small group in our nation’s Capital has reaped the rewards of government while the people have borne the cost.

[ … ]

The establishment protected itself, but not the citizens of our country.

[ … ]

That all changes – starting right here, and right now, because this moment is your moment: it belongs to you.

President Trump is an American. He believes in the rights of man. He is a capitalist. He is everything that Washington, D.C. hates.

RELATED ARTICLE: The Origins of the ‘Cult of Political Correctness’ [a.k.a. Cultural Marxism]

No U.S. data on financial/social impact of refugee resettlement on communities

And, I think the refugee industry wants to keep it that way! (Think about the enormous stonewalling going on in St. Cloud for instance!).

How many times over the years have I struggled to try to answer your questions about how much all of this is costing state and federal taxpayers? Now, I have a better understanding of why the facts are so elusive thanks to some researchers who sound like they do want to resettle refugees, but want answers too!

Caren Jean Frost and her fellow researchers are clearly not right-wingers. They are on to something, but will Trump’s Office of Refugee Resettlement listen?

Opinion from The Salt Lake Tribune:

Before you read know that “service providers” is the polite word for resettlement “contractors.”

Resettling refugees has become harder to justify, but not for the reasons you may expect. Lost in the passionate rhetoric of lobbyists, politicians and humanitarian agencies are statistics and evidence.

Appeals to forestall resettlement efforts speak to fears of terrorists infiltrating refugee flows, notwithstanding evidence that suggests otherwise. Advocates of resettlement reference duty, morality and hospitality, but don’t provide compelling evidence to justify the financial and social strains resettlement places on host communities.

Proponents on both sides struggle to support their reasoning with evidence, and this is the real issue. The absence of consistent data collection and measurement by service providers and government agencies has impaired policy makers’ ability to craft effective policy. Furthermore, resettlement data is full of holes and redundancies because service delivery agencies do not coordinate their data collection efforts. Additionally, service providers are unable to answer basic questions about the effectiveness of their programs and current resettlement trends because their data are not structured in an analyzable format.

Standardizing refugee resettlement data collection could revolutionize the resettlement process. It would facilitate analysis, enabling service providers and those interested in refugee statistics to more easily understand what is happening in real time. This information would also enable service providers to better serve refugee communities and educate policymakers on current trends, potential issues and policy gaps.

[….]

CCSLogo

Without meaningful data standards, agencies and organizations may struggle to evaluate their work and share information. Because funding is typically tied to defined performance or outcome measures, evaluation is a crucial element of program design. The absence of data standards makes evaluation problematic and makes comparisons across programs nearly impossible. The University of Utah’s Center for Research on Migration and Refugee Integration’s recently attempted to evaluate Catholic Community Services’ refugee case management program but was stymied before it even began because the case data were not collected in an analysis-friendly format; moreover, it is impossible to track refugee outcomes as individuals pass from one agency’s stewardship to another’s. Service providers and policymakers across the country face similar challenges.

[…..]

Data standardization can only happen if the United States’ Office of Refugee Resettlement takes the lead on this issue.Access to federal funding is already conditional on reporting to the office. The simple solution is this: tie federal funds to data standardization and formatting.

So why isn’t it being done?—surely reform doesn’t require the lazy lunks in Congress. ORR can require this before it throws more of your money at the US Refugee contractors. So why aren’t they doing it? I think I have a guess!

Muslim convicted of $1 million in food stamp fraud — Will he be deported?

Longtime readers know that I’ve had a side interest in food stamp fraud, specifically trafficking in food stamps.  This kind of fraud doesn’t involve purchasing unapproved items with food stamps as you might think, but it’s about selling ones benefits for 50 cents on the dollar.

It works like this: customer comes in with benefits, buys some small item, but the cashier rings up a larger amount.  Customer walks out with half the cash that was rung up. Clerk submits full amount to government for repayment.

It is called trafficking, and the fraud is huge at mom and pop convenience stores nationwide.

You can see my many previous posts on the topic by clicking here.  The vast majority of cases involve immigrant owners/managers of small stores like this one in Maine.

What is different in this Maine case is that the store is a Halal grocery store which says to me that it is very likely that the majority of people participating in the owner’s fraud are people who prefer Halal food.

Screenshot (1192)

Ali Ratib Daham

Learn more about the case against Ali Ratib Daham here.

And, by the way, there have been cases where customers are arrested and also found guilty of taking part in the scheme to defraud the US taxpayer, will there be some here?

From WGME (Hat tip: Frank) $1 MILLION fraud!

PORTLAND (WGME) – A man accused of running a welfare scam out of a Portland halal grocery is pleading guilty.

The market sells meat permissible under Muslim law.

According to federal court documents, Ali Ratib Daham is pleading guilty to federal food stamp and other welfare fraud.

He is also admitting to money laundering and theft from the state’s MaineCare program.

Daham is agreeing to a jail sentence of at least 33 months and will pay more than $1 million in restitution to the government.

In exchange, prosecutors are agreeing to drop dozens of other charges in the case.

The plea deal will be considered in federal district court Tuesday. The guilty plea could cause him to be deported.

They never deport these people, and tell me how is he going to repay $1 million when I’ll bet the money was moved abroad a long time ago.

Here is the pitch I’ve made innumerable times: If you are looking for something to do, start a blog on immigrant welfare fraud.  You will have news to post daily and it would be a great service to our country, especially since any real investigative reporters are few and far between.

RELATED ARTICLES: 

5 Terrorists Are Still in Pretrial Hearings for the 9/11 Attacks. Here’s Why It’s Taking So Long.

Somali arrested in Australia on terror charges; planned to shoot New Year’s Eve revelers say police

Michigan: Do we see a new trick by the US State Department to keep information from citizens?

Pope Francis arrives in Burma, will he use the ‘R’-word—Rohingya?

Heritage Foundation finds over 100 missing comments late today; most very critical of refugee program

Minnesotan does some homework on refugee employment issue; comes to unexpected conclusion

Declining population? Polish government says “breed like rabbits!”

In Charts, How These 7 Taxpayers’ Bills Would Change If Tax Reform Were Enacted

How will you fare if the GOP tax plan is enacted?

Well, on net, most Americans will see a significant tax cut under the proposed plans from Republican lawmakers, including virtually all lower- and middle-income workers and a majority of upper-income earners.

Both the House and Senate versions of the Tax Cuts and Jobs Act would, on average, provide immediate tax cuts across all income groups, according to analysis from Congress’ Joint Committee on Taxation.

This analysis does not, however, show how those tax cuts would vary based on factors such as total income, type of income, number of children, and itemized deductions.

While the plans lack a pro-growth cut to the top marginal tax rate (the Senate plan slightly lowers the top rate, but the House keeps the top rate and adds a higher bubble rate), both bills achieve significant reductions in business tax rates. This will help make America more competitive with the rest of the world, and will result in more and better jobs as well as higher incomes for all Americans.

To get a better idea of how some workers, families, and small businesses would fare under the proposed tax reform, The Heritage Foundation has estimated the tax bills of a range of taxpayers under current tax law, the House’s Tax Cuts and Jobs Act, and the Senate’s modified mark of that bill.

Tom Wong: Single teacher with median earnings of $50,000 per year. Under the current tax code, Tom pays $5,474 each year in federal income taxes. His tax bill would decline by $914, or 17 percent, (to $4,560) under the House’s plan and by $1,104, or 20 percent, (to $4,370) under the Senate’s plan.

These tax cuts come primarily from a higher standard deduction of $12,000 and from lower marginal tax rates. Currently, Tom’s marginal tax rate is 25 percent. But under both the House and Senate plans, his tax rate would become 12 percent.

John and Sarah Jones: Married couple with three children, homeowners, and $75,000 in annual income. John is a sales representative and earns an average of $55,000 a year. Sarah is a registered nurse. After having children, Sarah cut back to part-time work and she earns $20,000 a year. Under the current tax code, John and Sarah pay $1,753 each year in federal income taxes.

But under the House’s tax plan, their tax bill would decline by $1,033, or 59 percent, (to $720). Under the Senate’s plan, their bill would be reduced by $2,014, or 115 percent, (to $0, plus a refundable credit of $261).

Even though John and Sarah would have more taxable income under the proposed plans (as a result of not being able to deduct all of their state and local taxes and not being able to claim personal exemptions), they would still receive a tax cut because they would face lower marginal tax rates and receive larger child tax credits.

Their current marginal tax rate would decline from 15 percent to 12 percent under both the House and Senate plans. Their current child tax credits of $1,000 each would increase to $1,600 each under the House plan and $2,000 each under the Senate plan. The House plan would also provide $600 in family credits to John and Sarah.

The numbers listed in the above example for John and Sarah’s current tax payments assumes John and Sarah own a home and live in a state with average tax levels. Under the current tax code, if they did not own a home but instead rented, their federal tax bill would be higher ($2,375 instead of their current $1,753 tax bill).

This would mean that their subsequent tax cuts—as renters—would be larger: $1,655, or 70 percent, under the House plan and $2,636, or 111 percent, under the Senate plan. The House plan would partially eliminate and the Senate plan would fully eliminate an inequity in the current tax code that provides bigger tax breaks to homeowners, wealthy individuals, and people who live in high-tax states.

If the John and Sarah rent, their new tax bills would remain the same under both the House and Senate plans (because the larger standard deduction would mean they would not itemize regardless of whether they owned a home or rented).

Peter and Paige Smith: Married couple with two children, homeowners, $1.5 million annual income. Peter works for a technology startup company and Paige is an accountant. Although Peter’s income fluctuates significantly from year-to-year, this was a big year for his company and he received a very large bonus, bringing his total earnings to $1.4 million. Paige’s stable income of $100,000 provided their family the financial stability they needed for Peter to take a risk and follow his dreams.

Under the current tax code, Pater and Paige pay $439,275 in federal income taxes. Their tax bill would increase by $87,993, or 20 percent, (to $527,268) under the House plan and would remain relatively the same, decreasing by just $1,313, or 0.3 percent, (to $437,962) under the Senate plan.

Peter and Paige’s taxable income would increase under both the House and Senate plans because they would lose some or all of their state and local tax deductions. Their total exemptions and child tax credits would remain the same—at zero—as their income is too high to claim any exemptions or credits under the current code or the proposed plans.

Under the current tax code, Peter and Paige face a top marginal tax rate of 42.5 percent (39.6 percent, plus the 2.9 percent Obamacare surtax). Under the House plan, their top rate would rise to 48.5 percent (39.6 percent, plus the 6 percent “bubble” tax, plus the 2.9 percent Obamacare tax), and under the Senate plan, it would fall to 41.4 percent (38.5 percent, plus the 2.9 percent Obamacare tax).

Those marginal tax rates do not include Social Security’s 12.4 percent payroll tax, which can lead to extremely high combined marginal tax rates for second earners that are part of a high-income family like Peter and Paige. Because Paige makes less than Social Security current taxable maximum income of $127,200, her combined federal income and payroll tax rate is 54.9 percent under current law and would be 60.8 percent under the House plan and 53.8 percent under the Senate plan.

Although Peter and Paige would have the most taxable income under the Senate plan, the Senate plan’s lower top marginal tax rate does the most to remove the tax penalty on work and investment. The more Peter and Paige work and invest, the more jobs and income growth they help create across all income groups.  Peter and Paige would also benefit under the Senate plan’s lower marginal tax rates in the bottom brackets.

The above example assumes Peter and Paige live in a state with average taxes. Currently, however, their federal tax bill could be tens of thousands of dollars higher or lower, depending on whether they live in a state with higher- or lower-than-average taxes for them to write off. This is not the case under the proposed House and Senate tax plans, because the Senate plan fully eliminates the state and local tax deduction and the House plan eliminates all but a $10,000 property tax deduction (and at their income level, they would likely claim that full amount in any state).

Jose and Marie Fernandez: Married couple with two children, owners of JM Blinds and Shades LLC, homeowners, $250,000 annual income. Jose owns and manages JM Blinds and Shades manufacturing company. Marie primarily stays home with their young children, but she also helps out significantly with the business when needed. Under the current tax code, Jose and Marie pay $35,588, which is their alternative minimum tax (AMT) amount.

The AMT is a separate tax system, created back in 1982 to make sure that millionaires paid their “fair share” in taxes. However, because the AMT was not indexed for inflation until 30 years after it was enacted, it now hits a significant number of middle- to upper-income Americans with a higher tax bill than they would otherwise pay. That’s because under the current tax code, taxpayers pay the larger of what they owe under the regular income tax system and the AMT.

Both the House and Senate plans eliminate the AMT. Under the House plan, Jose and Marie’s federal tax bill would increase by $799, or 2.3 percent, (to $36,387) and under the Senate plan, their federal tax bill would decrease by $9,325, or 26 percent, (to $26,263).

Jose and Marie’s marginal income tax rates would vary significantly under the different tax plans. Their current marginal tax rate of 35 percent would decline to 30 percent under the House plan and 19.8 percent under the Senate plan.

Under the House tax plan, Jose and Marie would face a good deal more complexity. As a small business, they would face the top rate of 25 percent, but only on 30 percent of their income. The other 70 percent (counted as wages) would be taxed at the regular income tax rates (which range from 12 percent to 46.5 percent). At their current income level, that top rate would also be 25 percent. However, on top of that, Jose and Marie would face an additional 5 percent tax due to the phaseout of their child tax credits.

Under current law, Jose and Marie make too much to claim the $1,000 per child tax credits. Under the House plan, they would be able to claim $1,100 of each $1,600 child tax credit, and under the Senate plan, they would receive the full $2,000 credit per child.

Also, because Jose and Marie make $250,000, their next dollar of income would be subject to the 2.9 percent Obamacare tax under both the current and proposed tax plans. That would bring their marginal tax rate on any additional income to 37.9 percent under the current tax code, 32.9 percent under the House plan, and 22.7 percent under the Senate plan.

The above examples seek to show how some common taxpayers—including some wealthy individuals who are less common—would fare under the proposed tax reforms. Actual individuals’, families’, and businesses’ tax bills could vary significantly.

On net, however, most taxpayers—particularly lower- and middle-income taxpayers and businesses—will pay less in total taxes. Even more important than total taxes paid, however, is marginal tax rates. That’s because a lot of decisions are made at the margin.

For example, a worker is far more likely to work an additional hour if it counts as overtime and provides the equivalent of 1.5 hours’ worth of pay. And an individual is more likely to make a $1,000 contribution to his retirement savings account if that savings goes tax-free and means he can put all $1,000 away, instead of first having to pay between $100 and $400 in taxes on the savings.

Lower marginal tax rates are a big driver of economic growth, and the lower the rates, the higher the growth. Under the House bill, lower- and middle-income earners and businesses face lower marginal tax rates, but some high-income earners face higher marginal tax rates. The Senate proposal reduces the top marginal tax rate for an overwhelming majority of taxpayers, with the largest reductions occurring for businesses and for lower- and middle-income Americans.

While the proposed tax reforms do not achieve 100 percent of the potential pro-growth impacts that they could, they go a long way in helping to jump-start America’s struggling economy and put it on a pathway toward higher long-term growth.

Portrait of Rachel Greszler

Rachel Greszler

Rachel Greszler is a senior policy analyst in economics and entitlements at The Heritage Foundation’s Center for Data Analysis. Read her research.

A Note for our Readers:

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BankThink: Mortgage deduction helps housing lobby, but not homeowner

The battle lines are drawn between those seeking to protect the mortgage interest deduction (MID) and a legislative effort to greatly reduce the use of the MID. Hopefully, this is a battle that taxpayers will win over the housing lobby — the loudest supporter of keeping the deduction intact.

The housing lobby’s effectiveness is measured by its success at garnering subsidies. But the proposed House bill, the Tax Cuts and Jobs Act, would be a shot across the industry’s bow. The stage is now set for a crucial debate between two competing visions: the House plan — which would disincentivize the MID by raising the standard deduction and capping loans qualifying for the MID at $500,000 — and Senate tax reform legislation that effectively would leave the deduction intact.

From the perspective of taxpayer cost and federal budgeting, it’s no contest which plan is better. Since 1994, the cost of the MID, the separate real estate tax deduction (also downsized in the House plan), and other single-family tax subsidies has totaled over $2.5 trillion and in fiscal year 2017 were estimated to cost $141 billion. This does not include the many hundreds of billions in subsidies over the same period provided to or by Fannie Mae, Freddie Mac, the Federal Housing Administration, Ginnie Mae and others, and the $6.7 trillion in taxpayer mortgage debt guaranteed by these same agencies.

What did the U.S. taxpayer get for this massive level of rent-seeking? First, the U.S. homeownership rate today is 63.9% — statistically no different than the average rate of 64.3% since 1964 (excluding the bubble years). Second, these policies directly caused the 2008 financial crisis — a catastrophe for the U.S. and world economies.

True to their past positions, both NAR and the NAHB are opposing the House tax reform plan, favoring the Senate version. NAR had previously released a study it commissioned that found that a doubling of the standard deduction, elimination of the state and local tax deduction, and lower marginal tax rates would cause home prices to fall by 10.2%. On the other side are supporters of tax reform and lower marginal rates. Gary Cohn, President Trump’s head of the National Economic Council, stated in September: “People don’t buy homes because of the mortgage deduction.”

Before getting to the merits of these positions, it is worth noting the “man bites dog” nature of NAR’s admission that the MID drives home prices up higher than they otherwise would be. While this certainly explains the NAR’s past and current support for the MID, it is a damning admission for a group that purports to promote homeownership and “affordable housing.”

In terms of the merits, federal subsidies for homeownership like the MID get capitalized into higher prices, encourage the taking out of more debt, promote the buying of larger, more expensive homes, and price homes out of reach of lower-income buyers. Recent research at the Federal Reserve confirmed these points and found “when house prices are allowed to adjust in response to the elimination of mortgage interest deductions, the homeownership rate actually increases.”

One could end the argument here. However, this would leave NAR’s claim about a 10.2% price reduction unaddressed. First, a common sense reading of “a fall in home prices” is that prices would actually drop from current levels. This conflates a drop in price level and a slowing of the rate of increase. High-end home prices in 16 large metropolitan areas were up about 5% in July compared to a year earlier. A slowing of the rate of increase for high-end homes to the inflation level of 2% would, over three years, result in high-end home prices ending up about 10% lower than they otherwise would have been, but without an actual drop in prices.

Why is a slowing in the rate of increase, not an outright drop, the likely result? According to NAR, existing home sales have been in a seller’s market for 61 straight months and there are no signs of this abating anytime soon. A seller’s market is commonplace even at the higher price end of the home market. This includes San Francisco, where homes selling for more than $4.6 million have less than 2.5 months inventory along with similar conditions for the highest price points for metro areas such as Seattle and Los Angeles. Areas like Boston, Denver, New York City and Washington D.C. have a seller’s market except for price points in excess of $1.5 million to $2 million.

Jerry Howard, chief executive of the homebuilder association, told The Wall Street Journal that the House legislation is “a bad bill for housing.” In reality, it’s a good bill for American taxpayers and homebuyers.

Democrats in Meltdown Mode as Obamacare Individual Mandate Moves Toward Extinction

Democrats, of course, oppose the tax cuts moving through Congress. They believe government knows how to spend your money better than you do.

But what has really got their goat is eliminating the Obamacare tax—known as the individual mandate—that Americans have to pay to the IRS for simply choosing not to buy health insurance. This has thrown them into a tailspin of despair.

House Minority Leader Nancy Pelosi, D-Calif., said eliminating the individual mandate would amount to the “destruction of the Affordable Care Act.” She said it would create no less than a “life-or-death struggle for millions of American families.”

Senate Minority Leader Chuck Schumer, D-N.Y., said on the floor Thursday that “[t]he number of middle-class families who would lose money from this bill may be even higher now considering the 10 percent increase in premiums that will occur as a result of the Republican plan to repeal the individual mandate.”

Sen. Bernie Sanders, I-Vt., was asked by Anderson Cooper on CNN about cutting the individual mandate. “It’s a bad idea,” replied the former Democratic presidential candidate. “This is going to throw 13 million Americans off the health insurance they currently have.”

No doubt the talking points that flew around Democratic offices on Capitol Hill were written to scare people into thinking the tax cut forces people off all health care. But it’s a big stretch to state that as fact.

The Congressional Budget Office estimated that repealing the individual mandate would decrease the number of people with health insurance by 4 million in 2019 and 13 million in 2027. It also predicted average premiums in the individual market would increase by about 10 percent per year.

However, the Congressional Budget Office was extremely careful to explain the inexact science of its analysis. A whole section of the report is titled “Uncertainty Surrounding the Estimates.” To put it simply, economists can’t predict human behavior.

I don’t even know what health insurance I will pick to get the best bang for my buck in 2019. How would bureaucrats in D.C. know?

Nevertheless, Democrats grabbed that report and ran with it, trying to put on a horror movie through the halls of Congress.

Pelosi threatened that as the bill moves toward final passage in the Senate and a reconciled bill through both chambers, “outside mobilization” will be activated to stop it. She said the Senate Finance Committee’s decision to include repeal of the individual mandate “really electrified, energized the base even further … .”

Sen. Al Franken, D-Minn., tweeted on Tuesday: “RED ALERT: Senate GOP just added provision to their tax plan that would gut ACA & kick 13M ppl off insurance.”

(Yes, Franken tweets blatant falsehoods when he’s not groping women.)

Schumer took to Twitter to put the blame on the White House: “.@POTUS’s absurd idea to repeal the individual mandate as a part of the #GOPTaxPlan would boot 13M ppl from the health insurance rolls and cause premiums to skyrocket – all to pay for an even bigger tax cut for the very rich, those who pay the top rate. What a toxic idea!”

President Donald Trump, however, is quite enthusiastic about taking a big whack at Obamacare through the tax bill. Reportedly, Trump encouraged Sen. Tom Cotton, R-Ark., to get repeal into the committee bill text. This is what also infuriated the Democrats.

You can’t help but smile that Republicans are now using a 2015 ruling by the Supreme Court—which let the individual mandate stay in law, with the rationale that it was a tax and not a fine—as a way to ultimately kill the key provision that keeps Obamacare on life support.

Since the mandate is now considered a tax, its repeal will fit perfectly into the GOP tax reform plan.

Last week, a reporter asked White House press secretary Sarah Huckabee Sanders if the individual mandate repeal is a priority for the president. “That’s something the president obviously would love to see happen,” she responded.

The Obamacare mandate tax was always more of a “nanny tax” than a way to raise government funding. Democrats included it in the law in order to force the young and healthy to buy into the government-run health exchanges so as to offset the high cost of the old and very sick.

But the tax has ended up hitting lower-income and working-class families the hardest because it is much cheaper to pay the tax than to buy insurance on the Obamacare exchanges and pay the absurdly high insurance premiums and deductibles.

The hardest thing to do in Washington is to reduce the size and scope of the federal government. If the Obamacare tax can be repealed in the final bill that lands on Trump’s desk, Americans will get back a key individual liberty—the right to choose whether or not to buy government health insurance.

This would be the perfect early Christmas gift for hard-working families. Democrats should think twice before standing in the way of it.

COMMENTARY BY

Portrait of Emily Miller

Emily Miller is an award-winning journalist and the author of the book “Emily Gets Her Gun” about gun control policies. 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.

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