The current occupant of the White House read this off the TelePrompTer during his visit to Nancy Pelosi’s house:
Wages are rising at the fastest pace in decades, and growing for blue collar workers, who I promised to fight for, faster than anyone else. We passed a massive tax cut for working families and doubled the child tax credit. The United States economy is growing almost twice as fast today as when I took office, and we are considered far and away the hottest economy anywhere in the world. (Interesting that Republicans no longer vilify the President for using a TelePrompTer.)
Could be those behind on car payments intended to get caught up when they received their tax refunds. Oops. Many early tax-return filers are distressed to discover their refunds are smaller than they expected, averaging 8.4% less. (The scolds out there tell us a tax refund means we have given the government an interest-free loan during the year.)
When the much-vaunted tax changes went into effect, the IRS issued revised withholding schedules for employers to use. Cynics say the new tables were skewed too low to make the alleged tax reduction appear larger than it actually was.
Harley-Davidson paid its President and Chief Executive Officer, Matthew S. Levatich, $11.1 million in 2017, a 19% increase from his $9.35 million take the prior year, rewarding him for taking the company’s net income to $522 million, down 25% from 2016’s $692 million. Five years ago, he collected a paltry $3.7 million. A share of H-D stock (HOG) was priced at $69.24 at the end of 2013; $50.88 at the close of 2017, down 27%. ($42.31 on May 25, 2018.)
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.”