As you no doubt know, your tax return must be filed by April 15. When that due date falls on a Saturday, Sunday, or legal holiday, the filing deadline is delayed until the next business day. If you’re wondering why tax day is the 17th in 2018, you’re probably not familiar with Emancipation Day, a legal holiday in Washington D.C. Abraham Lincoln signed the Compensated Emancipation Act on April 16, 1862. This Act freed the more than 3,000 slaves in the District of Columbia. (Slavery was outlawed in the rest of the nation by constitutional amendment in 1865, after the end of Civil War. Mississippi ratified the amendment in 1995.) Emancipation Day became an official D.C. holiday in 2005.
War is expensive. Also in 1862, President Lincoln created the position of Commissioner of Internal Revenue and enacted an income tax to pay for the war. The tax was abolished ten years later. Income tax was legislated again in 1894, but the Supreme Court declared it unconstitutional. The 16th Amendment, providing for a tax on income was ratified in 1913. The rate was 1% and increased to 7% on incomes above $500,000. (The equivalent of $12.6 million in 2018.) With the onset of the Great War a couple years later, the rates doubled.
And here we are. One wonders about Donald Trump’s tax returns. Is money laundering taxed as ordinary income or does the more favorable “carried interest” rate apply?
Remember our previous President Barack Obama? He went on record that he would be willing to meet “not just with our friends but our enemies,” including North Korea. The reaction from Fox News was predictable. Fox talking heads were outraged about “bowing and scraping before dictators” because there’s no “discussing issues with Kim Jong-un.”
Our current President has impressive diplomatic and negotiating skills. When he announced that he will meet with the North Korean leader. According to Sean Hannity, “The world will probably be a little bit safer. The media should be giving President Trump credit for that.”
2016 was a tough year for hedge funds, their managers anyway. The combined income for the top 25 managers was a paltry $11 billion, the lowest since 2005. That’s just a little over half of the $21.2 billion they “earned” in 2014. Don’t feel too sorry for them, though. Most of their income is categorized as “carried interest” and taxed at a rate of 20%, compared to the 39.6% top tax rate for “earned” income. Your investment in a hedge fund is subject to the typical “two and twenty” fee structure. The fund manager annually takes two percent of your invested assets plus twenty percent “performance fee” on profits realized. (The performance fee is considered carried interest.) What if your assets lose money? Does the manager suffer 20% of the loss? Ha, ha, that was a joke.
While campaigning last year, our president said, “I have hedge fund guys that are making a lot of money that aren’t paying anything.” He said he would change the tax system to force those who work for hedge funds to pay more. “They’re paying nothing and it’s ridiculous. I want to save the middle class. The hedge fund guys didn’t build this country. These are guys that shift paper around and they get lucky.”
What little that has been revealed about the Republican “tax reform” includes a reduction of the tax rate to 15% for “pass-through” income. This is trumpeted as relief to small family businesses that are S corporations – meaning the business is not taxed. The income is passed through to the individual owners who are presumably taxed at a lower rate. Guess what – investment firms can be pass-through businesses also. If carried interest is taxed at the higher rate, who cares, because as pass-through income it will be taxed at even less than before.
The United States nominal tax on corporations is 35%, purportedly the highest in the industrialized world. The effective tax rate, because of endless incentives and breaks, is not so high, about 22% for profitable companies. Of the Fortune 500, nearly forty percent paid zero Federal tax in at least one year between 2008 and 2015. Some, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates.
Our president recently delivered a speech to an audience including hundreds of truckers – “hard-working men and women” who are “the lifeblood of the economy.” He touted a lower tax on manufacturers as a boon to truckers as it will increase growth and demand for trucking. He also wants to eliminate the estate tax, pejoratively called the “death tax” by Republicans. He claims this will allow truckers to pass their assets on to the next generation, allowing their businesses to stay in business. Republicans have previously said keeping family farms alive was the overriding reason to abolish estate taxes.
The first $5.49 million of your estate is exempt from estate tax; for a married couple, it’s $11 million. Tax experts calculate last year 80 farms were subject to any estate tax at all; for trucking companies, it was 30. Elimination of the estate tax is estimated to save the Trump family approximately a billion dollars. That assumes that The Donald does actually own anything.
As billionaire hotelier and husband of another New York real-estate magnate, Leona Helmsley, famously said, “We don’t pay taxes. Only the little people pay taxes.”
After the 1988 presidential election and his two terms in office, Ronald Reagan spoke to the nation’s schoolchildren.
I would say that the most important thing you can do is to ground yourself in the ideas and values of the American Revolution. And that is a vision that goes beyond economics and politics. It’s also a moral vision, grounded in the reverence and faith of those who believed that with God’s help they could create a free and democratic nation. They designed a system of limited government that, in John Adams’ words, was suited only to a religious people such as ours.
Well, I don’t have very much of a quarrel with the very cheap weapon and so forth that makes it so easy for the wrong people to have a gun. I would like to see us concentrate on what I described in California: of making sure that anyone who buys a gun is a responsible citizen and not bent on crime.
Two decades later, in his first year as President, Barack Obama planned to address the nation’s student body at the beginning of the new school year. Immediately, controversy ensued. Parents were outraged that the Kenyan Muslim not be allowed to indoctrinate their offspring with his socialist doctrine.
Where you are right now doesn’t have to determine where you’ll end up. No one’s written your destiny for you. Here in America, you write your own destiny. You make your own future. We need every single one of you to develop your talents, skills and intellect so you can help solve our most difficult problems. If you don’t do that – if you quit on school – you’re not just quitting on yourself, you’re quitting on your country.
Our current president recently addressed Boy Scouts at their Jamboree.
You know, in the Boy Scouts you learn right from wrong, correct? You learn to contribute to your communities, to take pride in your nation, and to seek out opportunities to serve. You pledge to help other people at all times. In the Scout oath, you pledge on your honor to do your best and to do your duty to God and your country. And by the way, under the Trump administration you’ll be saying “Merry Christmas” again when you go shopping, believe me. Merry Christmas. They’ve been downplaying that little beautiful phrase. You’re going to be saying “Merry Christmas” again, folks. But the words “duty,” “country” and “God” are beautiful words. In other words, basically what you’re doing is you’re pledging to be a great American patriot. By the way, what do you think the chances are that this incredible massive crowd, record setting, is going to be shown on television tonight? One percent or zero? The fake media will say, “President Trump spoke” — you know what is – ‘President Trump spoke before a small crowd of Boy Scouts today.” That’s some — that is some crowd. Fake media. Fake news. Thank you. And I’m honored by that. By the way, all of you people that can’t even see you, so thank you. I hope you can hear. Through scouting you also learned to believe in yourself — so important — to have confidence in your ability and to take responsibility for your own life. When you face down new challenges — and you will have plenty of them — develop talents you never thought possible, and lead your teammates through daring trials, you discover that you can handle anything. And you learn it by being a Scout. It’s great.
Afterwards, the Scout leader apologized for the president’s speech.
Responding to questions about why he spends so many weekends at Trump-branded properties, our president explained he did so because, “That White House is a real dump.” President Harry Truman held the same opinion. He complained that ghosts roaming throughout the building interrupted his sleep. What he heard was moaning and creaking from sagging floors and unreinforced walls.
Scott Pruitt, newly-appointed head of the Environmental Protection Agency, made a career out of suing the EPA. When not working to ban abortion and same-sex marriage, Pruitt, as Attorney General of Oklahoma, filed thirteen lawsuits against the EPA. It’s only fitting that our current president put the climate-change denier in charge.
With so many headlines, the proposed change to the Energy Star program has not received much attention. “Proposed change” meaning elimination.
You are probably familiar with the Energy Guide label that tells what it will cost to run your new refrigerator. The program costs about $50 million per year. The EPA estimates that it has saved Americans $362 billion in energy costs since its inception in 1992. The Energy Star programalso rates hotels, condominiums and office buildings on energy efficiency, information of interest to prospective buyers and lessees. In 2014 alone, building owners saved $7.6 billion on energy costs.
The Energy Star ratings are on a scale, from bad to good, of 1 to 100. In case you are curious about how Trump-branded properties rate, CNN has put together a handy chart.
610 Park Avenue (formerly the Mayfair Hotel)
1
Trump Park Avenue
7
Trump International Hotel & Tower Chicago
9
Trump International Hotel & Tower New York
12
Trump Place, 160 Riverside
14
Trump SoHo New York
16
Trump Palace
19
Trump Place, 140 Riverside
22
Trump World Tower
31
Trump Parc
42
Trump Tower
48
Trump Parc East
52
555 California Street (formerly Bank of America Tower)
War is expensive. Also in 1862, President Lincoln created the position of Commissioner of Internal Revenue and enacted an income tax to pay for the war. The tax was abolished ten years later. Income tax was legislated again in 1894, but the Supreme Court declared it unconstitutional. The 16th Amendment, providing for a tax on income was ratified in 1913. The rate was 1% and increased to 7% on incomes above $500,000. (The equivalent of $12.6 million in 2018.) With the onset of the Great War a couple years later, the rates doubled.
