Posts Tagged ‘Salt’

Will New Jersey Decide GOP Majority?

October 23, 2018

To flip a House seat from red to blue, Democrats pretend the tax cut was a hike.

.
Image result for new jersey, state silhouette
New Jersey Republican candidate Jay Webber speaks in Hanover, N.J., Oct. 17.
New Jersey Republican candidate Jay Webber speaks in Hanover, N.J., Oct. 17. PHOTO: JULIO CORTEZ/ASSOCIATED PRESS
.

There are strange things done under the New Jersey sun. But nothing beats the whopper Democrats are now trying to pass off on voters in an effort to flip the state’s 11th Congressional District. In this key suburban swing district, Democrat Mikie Sherrill is asking voters to believe that the 2017 Republican tax cut is really a tax hike.

Image result for Mikie Sherrill, new jersey, photos

The charge is rooted in the idea that the caps on mortgage interest and state and local tax, or SALT, deductions turn a tax cut for everyone else into an increase for New Jerseyites. Never mind that the House Ways and Means Committee reckons the GOP tax bill still works out to $6,040 in savings for the average middle-class family of four in the district. Or that the bill also pares back the Alternative Minimum Tax, which slams the district’s high-income earners.

Ms. Sherrill and the Democrats are spinning it as a tax hike and themselves as tax cutters. And this, not Donald Trump, has been her major line of attack on Republican candidate Jay Webber.

“The tax cut was good for America and good for New Jersey,” Mr. Webber says. “But all my opponent wants to do is complain about the SALT deduction. I’d like to see the SALT caps rolled back or modified too, but it doesn’t change the fact that the tax cut is still a cut, and it’s still a big win.”

Mr. Webber says his district “has never been more relevant” to national politics because it is a microcosm of the suburban areas the GOP needs to hold in the coming midterms to retain its House majority. For more than two decades it was represented by moderate Republican Rodney Frelinghuysen, but like the rest of the state it has been growing bluer. In 2016 Mr. Trump carried the district—but by less than a point.

Add to this that Ms. Sherrill is an attractive candidate with a strong backstory. She’s a former Navy pilot and federal prosecutor, as well as a mom to four children. If you don’t hear her complaining about money in politics, it’s probably because she has raised $7 million, a state record for a House candidate, against Mr. Webber’s $1.3 million.

But Mr. Webber is an attractive candidate in his own right. A Harvard Law grad and father of seven, he has been a steady advocate in the state Assembly for lower taxes in one of the most overtaxed states in the union. And though a recent New York Times/Sienna College poll showed him down 11 points, most polls show a tight race within the margin of error.

Mr. Webber has tried to tie Ms. Sherrill to both House Minority Leader Nancy Pelosi and Democratic Sen. Bob Menendez, whose lead in his own campaign is eroding as his challenger hammers him on corruption. Though Ms. Sherrill says she wouldn’t vote to make Ms. Pelosi speaker, she has also said she “applauds” Ms. Pelosi’s legislative achievements. In the debate with Mr. Webber, she said she would cast a ballot for Mr. Menendez and characterized him as “a fighter for New Jersey.”

But it’s the tax argument where Ms. Sherrill is getting away with campaign murder. It’s one thing to talk about the unfairness of caps on SALT deductions. It’s another to do so without any reference to the crushing New Jersey taxes that make the deduction important.

In June, Ms. Sherrill’s fellow New Jersey Democrats—Gov. Phil Murphy and the state Legislature—raised both personal and corporate income taxes. This was followed in October by a rise in the state’s gas tax, taking it from the nation’s second lowest to its ninth highest. Ms. Sherrill hasn’t spoken against any of it.

“Democrats raise taxes,” says Mr. Webber. “That’s what they do.”

Ditto for what she brings to Washington. A Democratic House would likely make Ms. Pelosi speaker again, whether Ms. Sherrill votes for her or not. And Ms. Pelosi has made clear that at the top of her agenda is getting rid of the 2017 tax cut. In today’s Democratic Party, can anyone really believe Ms. Sherrill would be a bipartisan voice for lower taxes?

Meanwhile, each side is bringing in the heavy artillery. Former Vice President Joe Biden came to New Jersey to stump for Ms. Sherrill, as did former Rep. Gabby Giffords. Mr. Webber has had comparable visits from Speaker Paul Ryan and Vice President Mike Pence—as well as a fundraiser scheduled with Mr. Trump for Oct. 25 and a recent presidential tweet calling Mr. Webber “outstanding in every way” and offering a “Full and Total Endorsement.”

But in the end it all probably comes down to the tax argument. To explain Ms. Sherrill’s claim she would be an advocate in Congress for lower taxes, Mr. Webber makes an allusion to Mr. Murphy’s bid to legalize recreational marijuana.

“If you’re buying my opponent’s argument about taxes,” he says, “you’re already smoking the stuff Phil Murphy wants to make legal.”

Write to mcgurn@wsj.com

https://www.wsj.com/articles/will-new-jersey-decide-gop-majority-1540250096

Advertisements

Three ‘terrorists’ killed, five detained in Jordan raid

August 12, 2018

Jordanian security forces have killed three “terrorists” and arrested five others during a raid after an officer was killed in a bomb blast near the capital, the government said Sunday.

Three members of the security forces also died in Saturday’s raid, which came after the home-made bomb exploded under a patrol car at a music festival.

A joint unit of special forces, police and army troops raided a house in the town of Salt northwest of Amman in search of a suspected “terrorist cell”, government spokeswoman Jumana Ghneimat said.

Three members of the security forces were killed in a shootout with gunmen holed up in a building, she said.

© afp/AFP/File | Jordanian security forces are seen in December 2016 during the funeral of people killed in an attack claimed by the Islamic State group in the tourist destination of Karak

“The suspects refused to surrender and opened heavy fire toward a joint security force,” Ghneimat said in a statement.

e building in which they were hiding, and which they had booby-trapped earlier”, she said.

In an update early Sunday Ghneimat said that the three bodies as well as automatic weapons were found under the rubble of the building, a four-storey block of apartments.

She added that two other “terrorists” were arrested, bringing the total number of people detained in Salt since Saturday to five.

There was no immediate claim of responsibility for Friday’s bomb blast, which also wounded six other members of the patrol in Al-Fuhais, a mostly Christian town west of Amman.

The identities of the suspects were not known.

One of the members of the security forces wounded during the raid was in “critical condition”, Ghneimat said

“A clean-up operation is still under way,” she said, adding that units of the civil defence were at the scene to assess the damage at the building and sift through the rubble.

Ghneimat urged civilians to stay away, warning that “it could totally collapse at any minute”.

Medical sources said that 11 people were wounded during the raid, including members of the security forces and civilians.

Women and children were among those hurt, they said, without giving further details.

– Crisis cell –

Jordanian television broadcast footage of the partially collapsed building and security forces conducting search operations.

Ambulances, bulldozers and police cars were deployed around the building in the Naqab al-Dabour residential neighbourhood in Salt, the footage showed.

The government set up a crisis cell to follow the developments, the state-run Petra news agency reported.

Prime Minister Omar al-Razzaz, who chaired the meeting, vowed Saturday that Jordan would “not be complacent in the hunt for terrorists”.

Bomb blasts targeting security forces are rare in Jordan, although the tiny desert kingdom has had to struggle with a rise in Muslim fundamentalism in recent years.

Jordan has played a key role in the US-led coalition fighting the Islamic State group in neighbouring Syria and Iraq, using its air force against the jihadists and allowing coalition forces to use its bases.

The kingdom was hit by a string of attacks in 2016, including a shooting rampage claimed by IS that killed 10 people including a Canadian tourist in Karak, known for its Crusader castle.

AFP

Coal Companies Spend the Least on Miners

June 6, 2018

It was 2am, on May 7, in the village of Shalmano. Seven dead bodies had just arrived in the area located in Shangla district in Khyber Pakhtunkhwa. “My heart skipped a beat as soon as the ambulances opened their rear doors. Before I knew it I fell unconscious,” describes Umar Ali, a 22-year old coal miner who works in Machh, Balochistan. The mine he works in is one of 147 belonging to the Indus Coal Mines company.

Since that fateful day, Ali (on a two-month break from work) has been unable to eat heartily and his mother refuses to let him return to work.

In the first week of May this year, 23 men died and another 19 were injured in two mine-related accidents, according to the Pakistan Central Mines Labour Federation (PCMLF). The dead included the seven men from Ali’s village.

The loss of lives in recent coal-mining accidents brings to light some harsh realities

“We’re still in the fifth month of the year, and already so many men have died. The numbers keep rising each year,” says Mohammad Sultan Khan, secretary general of the PCMLF, a labour rights watchdog while talking to Eos over the phone from Quetta. A month back, in April, 21 miners had died and 47 were injured. Between January 2010 and March 2016, over 280 miners lost their lives in mining accidents in Pakistan, according to Sultan Khan. He fears that the number could be much higher as many deaths remain unreported with the coal fields situated in mountainous and inaccessible areas.

In one mine, there was an explosion due to build-up of methane gas and in the other, a mudslide had trapped, killed and injured several miners. Labour rights activists say these accidents are common due to poor enforcement of safety regulations.

“The roads are terrible, making speedy evacuation impossible in case of serious injury when time is of the essence,” says Sultan Khan. In addition, he says, workers are not provided proper equipment to check gas pressure. Often explosives for blasting rocks are improperly used. Caving in of mines is also a common occurrence.

THE WEAKEST LINK: THE COALMINER

In the entire process of coal extraction, the only consideration is how much money can be made by spending least on the most important link in the chain — the workers.

A coal miner wipes sweat off his forehead | Sarah Rashid / Reuters
A coal miner wipes sweat off his forehead | Sarah Rashid / Reuters

According to Ali, most workers suffer from respiratory problems such as asthma with bouts of cough — a regular background noise they soon get used to. “They come young and healthy and if they do not suffer an injury, they usually waste away in a few years, having contracted tuberculosis or Hepatitis B and C,” says Sultan Khan.

A 2013 study, carried out by the Department of Community Medicine, Pak International Medical College in Peshawar, on 400 miners in Cherat in Nowshera district, found 71 percent of miners suffering from respiratory health issues, whilst 49.5 percent had pneumoconiosis — a disease of the lungs due to inhalation of dust, characterised by inflammation, coughing and fibrosis.

INTO THE BELLY OF EARTH

Most coalminers are aware of the risk they are taking when they opt to go into this kind of work. In olden times, miners would carry a caged canary inside the pit and if the bird died, it was a signal to the workers to exit the mine immediately as the gases had reached toxic levels.

Journeying airless into the deep, dark recesses of the earth to dig out the black gold, using antiquated tools, can mean inhaling not just soot but toxic gases, being at risk of gas explosions, fires and even cave-ins, while hauling coal.

However, hauling coal is the easier part. At one time, Ali had to haul up dead bodies of co-workers. “That was the first time I blacked out,” he says.

Young workers inside a mine in Choa Saidan Shah, Punjab | Sarah Rashid / Reuters
Young workers inside a mine in Choa Saidan Shah, Punjab | Sarah Rashid / Reuters

According to Sultan Khan, it is always the co-workers who bring up the injured and the dead, never the rescue teams the government sends in the event of an accident. “The rescuers would never dare go so deep inside the mines. That is why I always say that coal miners should be given professional training in rescue work, but who listens!” he says.

PAKISTAN’S COAL RESERVES

The coal reserves of Pakistan are estimated at more than 185 billion tonnes. Nearly four million tonnes of coal is extracted annually, most of which is consumed by cement factories and brick-making kilns and for domestic use and very little for power generation. Another five million tonnes is imported from South Africa, Malaysia and Australia and is mainly used for power generation.

In Sindh, coal has been found in Thar, Lakhra, Sandra Jherruck, Meting-Jhimpir, Indus East and Badin; in the Sor Range/Degari, Khost, Mach (Bolan) and Duki in Balochistan; the Salt Range and Makarwal in Punjab; Cherat and Hangu in Khyber Pakhtunkhwa, and in Kotli in Kashmir. The country is littered with thousands of coal mines but only a few are registered. In Punjab, according to mining groups, there are 2,600 registered mines.

A lift system inside a mine takes coal and miners up and down between the mine and the surface | Mukhtar Azad
A lift system inside a mine takes coal and miners up and down between the mine and the surface | Mukhtar Azad

The mines are mostly owned by the state-run Pakistan Mineral Development Corporation, which is under the administrative control of the Ministry of Petroleum and Natural Resources. But most mines are leased out to private contractors.

While no surveys have been carried out in Balochistan, Sultan Khan estimates there could be up to 450 coal mines in the province. The reason for the lack of data is because there is no central registry.

“The mountains are leased out to individuals who then give it to operators, who hire supervisors to extract coal,” says Sultan Khan.

In several cases, the Balochistan chieftains have leased out the land as “political bribe”, says Karamat Ali, executive director of Pakistan Institute of Labour Education and Research (Piler).

BALOCHISTAN MINES BUT KP MINERS

Interestingly, a majority of mineworkers in Balochistan come from Khyber Pakhtunkhwa — particularly from Swat and Dir. Sultan Khan estimates that they form 87 percent of the workforce, with just 10 percent from Balochistan itself. “Most Pashtuns from Khyber Pakhtunkhwa have always done hard labour; on the other hand, the Pashtuns from Balochistan have been businessmen.”

Overall, he says, there are nearly 300,000 workers employed in minerals mines (including salt, chrome, copper, gypsum, marble and gold) across Pakistan out of which 200,000 alone work in coal mines. Of these, he estimates, about 125,000 to 150,000 are employed in Balochistan.

It is the money that lures them to the mines.

“Otherwise,” points out Ali, “who in their right mind would want to leave this heavenly place — lush forest, waterfalls and streams everywhere and weather to die for — and go to that godforsaken place which is dusty and barren?” A father of three, the young man has been working in coal mines since he was 15.

Yousuf Gill is amongst those who risk their health and life for a livelihood | Mukhtar Azad
Yousuf Gill is amongst those who risk their health and life for a livelihood | Mukhtar Azad

“I earn more in the six to seven months at the mines than I would ever be able to earn in a year,” he says. He works a 12-hour shift daily, sometimes going as deep as 6,000 feet for which he brings back 130,000 rupees.

“When I return to my village, the first few days are spent paying off the medical store, the grocer and the woodcutter,” he says.

Working in coalfields in Balochistan presents a stark and humdrum life. “We live in tents. Our meals consist of either a potato curry or lentils. On Thursdays we eat a meat dish and Friday is our day off when we wash our clothes, clean ourselves up — some may even head to a nearby town,” says Ali. “During break from work, it is music that keeps us entertained but only if someone among us with a mullah mindset has no objection!” he adds with a laugh.

“Poverty [among miners] is endemic; very few are educated and there is no [other] employment opportunity here for the men but they earn good money,” says 55-year-old Gulshah Khan, who worked as a driver in Islamabad for two decades and is now living a retired life earning from investments made in the mining industry.

In his village of Zarra, neighbouring Ali’s village, 14 men died in the two accidents. Seven were from the same family. Among the dead were two neighbours — Abdullah, 22 and his younger brother, 18-year-old Abdul Haq — who were miners in Marwar district in Balochistan.

“Their father also died from an accident in the same mine, when they were very young,” recalls Alibash Khan, a social worker, based in Shangla, who knew the boys. “Abdullah was to get married in June. It was heartbreaking to see all the preparation his mother had done for the upcoming wedding.”

END THE CONTRACT SYSTEM

“We do not have a good track record with safety issues of miners,” said Sultan Khan. “Unless the contracting system ends [and] labourers are registered with the Employees Old-age Benefit Institution [EOBI] [so they can avail benefits], we do not see any improvement in the plight of the workers,” he says. Moreover, inspections do not take place regularly under the supervision of private contractors. Even those working in the ship-breaking industry (well known as a hazardous workplace) are better off. “And that is not saying too much!” Sultan Khan continues. “If there is a fire on the ship, the workers either have to jump in the water and drown or get burned!” he explains. “In the case of those who are injured in a mine accident, some lose their limbs, some even their mind, but the contractors see no reason to come forward to pay compensation or hospitalisation [fees].”

SINDH MINE WORKERS BETTER OFF THAN BALOCHISTAN’S

“The mines in Balochistan are no less than death knells for workers,” says Qamoos Gul Khattak, secretary general of the National Labour Federation (NLF).

“You may find several mineworkers’ unions across Pakistan but all are headed by contractors. In such a situation, how will the voice of the workers in coal mines be heard?” he asks. He considers one of the biggest reasons for the deplorable plight of mine workers in Balochistan is that the province has the worst track record for health and safety of workers.

Khattak says that Sindh was the only province which had a union for miners in the true sense.

“This is absolutely correct!” concedes Sultan Khan, adding, “Balochistan trade unionists were fighting on many fronts. The topography [mines lie in very remote areas] makes access impossible, the law and order situation is almost non-existent and the feudal lords are both politicians and mine-owners making it most difficult to hold them responsible.”

In contrast, Khattak points out, “Mine workers in Sindh get an annual pay raise, an annual bonus, paid leave, a reward of 3,000 rupees on every Eid and healthcare is completely free even if it means expensive heart surgery.” If a worker is injured and unable to continue work, he is paid 5,250 rupees per month till his death. In case of an accident, the compensation is 600,000 rupees and another 100,000 rupees for transportation of the dead body and burial of the deceased. There is also proper housing and playgrounds for them.

NEED TO REVIEW AGE-OLD LEGISLATION

Pakistan has four national level laws related to health, safety and welfare of workers engaged in mining and quarrying: the Mines Act 1923, Mines Maternity Benefits Act 1941, Coal Mines (Fixation of Rates and Wages) Ordinance 1960, and the Excise Duty on Mineral (Labour) Welfare Act 1967. Under the existing laws and the general atmosphere of apathy, the owners and authorities care little about enforcement of safety clauses. “Examination of the four national level laws relating to health, safety and welfare of workers shows that these haven’t been reviewed after the 18th Amendment to conform to the ILO conventions of 1995 and later to the 2006 ILO code,” explains Huzaima Ikram, a senior advocate.

According to Sultan Khan, the Mines Act 1923 is a very comprehensive one, but does not penalise or hold anyone responsible in case of an accident.

“Coal extraction in developing economies like Pakistan comes at a great human cost because coal is cheaper and it exists aplenty,” Zeenat Hisam, senior researcher, having worked on labour rights for over two decades, tells Eos.

In a recent op-ed in daily Dawn, Hisam writes: “Pakistan has yet to legislate on and effectively enforce a modern mining law protecting the rights of all stakeholders including workers.”

Ikram says that the main reason for not updating the British-era mining laws is apathy on the part of legislators sitting in assemblies and the “ineffectiveness” of labour unions. In addition, there is no debate on this vital issue in the media which becomes active only in the event of a catastrophe. “Even then, they don’t open up discourse on the inadequacy of law and rules,” she points out.

According to Ikram, there is an urgent need for all provinces to re-enact the national level laws. However, she points out that, in a recent case, the Supreme Court held that although labour matters stand devolved to provinces, if more than one province is involved, then the labour laws as enacted by the National Assembly will prevail and provincial law will have to yield.

Published in Dawn, EOS, June 3rd, 2018

https://www.dawn.com/news/1411754/society-soot-and-plunder

Andrew Cuomo Goes to War

January 9, 2018

It’s a battle between the blue and the red, says New York’s governor.

New York Gov. Andrew Cuomo during a news conference at the Executive Mansion in Albany, N.Y., Jan. 17, 2017.
New York Gov. Andrew Cuomo during a news conference at the Executive Mansion in Albany, N.Y., Jan. 17, 2017. PHOTO: HANS PENNINK/ASSOCIATED PRESS

In the iconography of the American Civil War, the two sides are defined by their colors: union blue versus rebel gray. A century and a half later, Andrew Cuomo invokes colors to advance again the argument that a Republican federal government has divided the states. This time the colors are red and blue.

In his official address kicking off the new year—and no doubt his bid for the White House—Mr. Cuomo accuses Republicans in Washington of having declared an “economic civil war” aimed at “robbing the blue states to pay for the red states.” The reference is to the limit on deductibility for state and local taxes in the GOP tax reform passed just before Christmas. The effective tax hike on New York residents, the governor complains, “could cause people to leave the state.”

Hyperbole aside, Mr. Cuomo and other blue-state governors are right about the pain. The SALT deduction operated as an effective federal subsidy for blue-state taxpayers because it returned to them some of the high taxes they paid to their state governments. With the deduction now capped at $10,000, citizens in states such as New York, New Jersey, California and Connecticut will be feeling more keenly the pinch of their states’ tax and spending policies.

“SALT is one of many maneuvers that have let states spend without facing reality,” says Eileen Norcross, director for the State and Local Policy Project at George Mason University’s Mercatus Center. “The states hurt the most by the changes to SALT are the same states that have relied on evasive budgetary tactics: lowballing liabilities, skipping pension payments and issuing debts to cover debts.”

Mr. Cuomo’s resort to war metaphors is illuminating. In the few weeks since the tax bill has become law, blue-state pols have declared they are willing to entertain any number of workarounds to deliver relief for their taxpayers: suing on the grounds that capping the deduction is unconstitutional, changing their nondeductible state income taxes into deductible charitable contributions, or replacing a state income tax with a payroll tax, which employers would be able to deduct.

In other words, Gen. Cuomo and his fellow civil warriors will consider anything to hold the blue line—anything, that is, except address the root problem by lowering their taxes and spending. Because to do so would require taking on the public unions that drive much of state spending and debt, and are the key constituency of the 21st-century Democratic Party.

Ironically, in the course of denouncing the attack from Republicans in Congress and the White House, Mr. Cuomo ceded their core argument: Tax rates affect behavior. For in his declaration of war, Mr. Cuomo admitted his worry that hiking the marginal tax rate on New Yorkers gives them an incentive to relocate. Until now it was supposed to be a Republican canard that highly taxed blue staters defect to lower-taxed red states.

Just as illuminating, this is a battle being waged for the wealthy. In his speech Mr. Cuomo hailed the Empire State as a progressive “beacon” unto the nation. But in a Monday post, Thurston Powers, a legislative analyst for the American Legislative Exchange Council’s Center for State Fiscal Reform, noted that 88% of the savings from the SALT deduction were enjoyed by people with incomes of $100,000 or more.

Note to New York City mayor and self-styled Progressive in Chief Bill de Blasio : The elimination of this deduction diminishes an effective subsidy for wealthier taxpayers. So where are the shouts of support for making the rich pay their “fair share”?

Instead, Gen. Cuomo speaks of war. It’s an interesting way to enter 2018. At the moment almost all press attention has been focused on the national level, where the story is the prospects for Democrats to use the November midterms to take both the Senate and the House from Republicans.

But Congress isn’t the only place where Democrats have lost influence. One critical measure of Democratic weakness has been the Republican capture of governorships and state legislatures. Over the Barack Obama years, Democrats lost roughly 900 legislative seats across the nation, reducing the party to its lowest level of representation in decades.

Even some recent big reversals—e.g., Virginia House seats and the New Jersey governorship—haven’t really altered the lopsided imbalance. At the national level, the Democratic message still seems to be “resistance.” Meanwhile, at the state level Steve Malanga, a fellow at the Manhattan Institute, suggests Democrats such as Gov. Cuomo haven’t figured out their real enemy.

“Voters know that the dilemma Democrats really face is that blue-state reform requires taking on the public-sector unions,” says Mr. Malanga. “It’s hard to imagine how a message of civil war is going to win back Democratic seats at the state level or make these states more attractive economically for their citizens.”

Write to mcgurn@wsj.com.

Appeared in the January 9, 2018, print edition.

California Poses Problem for GOP as 2018 Dawns

January 1, 2018

Party policies ranging from taxes to immigration cast a shadow over midterm prospects

California is the nation’s most populous state, home to 53 seats in the House, reservoir of 55 Electoral College votes—and a growing political problem for Republicans as the 2018 midterm election year dawns, Gerald F. Seib writes.

.

California is the nation’s most populous state, home to 53 seats in the House of Representatives, reservoir of 55 Electoral College votes—and a growing political problem for Republicans as the 2018 midterm election year dawns.

GOP fortunes have been declining for the last two decades in California, a trend that may be accelerating. The recently passed tax-cut bill, with its limits on deductibility of state and local taxes and mortgage interest, seemed almost designed to strike at high-tax states with pricey real estate such as California. As a result, two of the 12 GOP House votes against the measure came from California representatives, while some of the state’s Republicans who voted for the measure did so with misgivings.

Meanwhile, President Donald Trump’s immigration policies are widely unpopular in a state with a large population of Hispanics and Asian-Americans. Both the state and the city of San Francisco are suing the administration over its attempt to cut federal funds to so-called sanctuary cities, which decline to help federal authorities find and deport illegal immigrants.

The president’s decision to withdraw from the Paris climate accords, and his tendency to dismiss fears of global warming, cut against the grain in California, home of some of the country’s most environmentally attuned citizens. Republican efforts to undo Obamacare also are an irritant in a state that has tended to strongly support the law.

Add it all up and a bad situation for Republicans could easily get worse. Democrats already hold both of California’s Senate seats, its governorship, virtually all statewide offices and 39 of its 53 House seats.

Now even some of the 14 House seats California Republicans do hold are in jeopardy in this year’s midterm election, when control of Congress hangs in the balance. Half of those Republican incumbents come from districts carried by Democrat Hillary Clinton in the 2016 presidential contest.

The Cook Political Report rates eight of the 14 House districts Republicans hold as highly competitive this year, and calls three of them tossups, meaning Democrats’ chances of seizing them are roughly equal to the GOP’s chances of retaining them.

In short, in a year in which Democrats will be gunning to take over 24 House seats to win back control of the House, California sits atop their target list.

“These Republican incumbents are still in a very difficult position,” says Dan Schnur, a former Republican political consultant who now is a professor at the University of Southern California’s Annenberg School of Communications.

He wrote a piecein the Los Angeles Times recently asserting that California Republicans “have been left hanging by their national party leadership, whose focus seems to be squarely on the needs of their colleagues in more conservative parts of the country.” The Los Angeles Lakers, he noted, have more players on their roster than California Republicans have representatives in Congress.

Mr. Schnur thinks the new tax cut, despite provisions that are problematic in California, may prove a marginal benefit to some of the California Republicans, because it will help energize the GOP base and shift the focus of debate toward economic issues and away from the social issues that separate many Californians from the national Republican party.

Still, he adds, “the biggest challenge for these suburban Republicans is more cultural than it is legislative. They’re are a lot more uncomfortable with Trump’s behavior than they are with his policy agenda.” Immigration, he adds, looms as “the biggest challenge for Republican incumbents.”

Even if Republicans manage to hold their own in this year’s midterm elections, the state is likely to remain a forbidding land for the GOP in presidential politics.

It’s hard to believe now, but California was, not so long ago, a bedrock for Republican presidential ambitions. Its stash of electoral votes “gave Republicans a near lock on the presidency in the 1970s and 1980s,” notes the Almanac of American Politics.

That began turning in the 1990s. Among other factors, Gov. Pete Wilson won re-election while supporting Proposition 187, a ballot measure designed to ban state aid to illegal immigrants. Republican fortunes among Hispanics began to decline, and the party’s broader fortunes followed suit.

By 2012, then-President Barack Obama carried California with 60% of the vote. In 2016, Mrs. Clinton won 62% of the vote, and 900,000 more raw votes than did Mr. Obama four years earlier.

Four of California’s counties switched from Republican to Democrat in 2016, including Orange County, long a bastion of Republican party conservatives.

Orange County hadn’t gone Democratic since the time of Franklin Roosevelt. Now the two conservatives who represent the county in Congress, Reps. Dana Rohrabacher and Darrell Issa, are among the House’s most imperiled incumbents — and were the two Californians who voted against the just-passed tax bill.

Write to Gerald F. Seib at jerry.seib@wsj.com

 https://www.wsj.com/articles/california-poses-problem-for-gop-as-2018-dawns-1514819328

A Tax Reform for Growth

December 16, 2017

The GOP bill will spur investment and make the U.S. more competitive.

Sen. Marco Rubio speaks during a news conference on Capitol Hill in Washington, Sept. 26.
Sen. Marco Rubio speaks during a news conference on Capitol Hill in Washington, Sept. 26. PHOTO: PABLO MARTINEZ MONSIVAIS/ASSOCIATED PRESS

House and Senate conferees signed their tax agreement on Friday, and the bill that seems headed for passage next week is—Minor Miracle Dept.—better than what either body first passed. The bill’s corporate reform is far superior to its muddled rewrite of the individual code, but on balance this is the most pro-growth tax policy in decades.

The bill’s biggest achievement is reforming at long last the self-destructive U.S. corporate tax code. The top U.S. rate of 35%—highest in the developed world—will fall to 21% on Jan. 1. Cash currently held overseas will be taxed at a 15.5% one-time “deemed” repatriation rate, and America will move to a territorial system that allows money to be taxed where it is earned. The bill includes rules to prevent companies from concealing taxable income, especially on intangible assets such as intellectual property. And it sweeps away billions of dollars worth of industry-specific loopholes that misallocate capital.

All of this will go a long way to restoring American competitiveness that has eroded over several administrations. Even Barack Obama acknowledged this problem, though he declined to do anything lest some large business end up with a tax cut.

The same economists who presided over the weakest recovery since World War II now say none of this is needed with the economy finally growing at 3%. But the faster growth never materialized when they were in power, and this expansion has been notable for slow business investment and weak productivity growth.

This GOP tax reform—including five years of 100% immediate business expensing—is aimed directly at that weakness to keep the expansion going even as the Federal Reserve raises interest rates. This isn’t a demand-side “sugar high.” These business tax changes are supply-side reforms that will increase the economy’s productive capacity.

Reducing the cost of capital should raise business investment and invite a capital inflow to the U.S. More investment means more hiring and more productive workers, which is what increases wages. Especially with a tight labor market, the share of income that goes to workers should increase. After eight years of trying to redistribute income through higher taxes and more subsidies, why not try a return to growth economics?

***

The individual tax reform isn’t nearly as ambitious. The GOP has rearranged some furniture to try to give everyone a tax cut while trying not to change the distribution tables of who pays taxes. The one bow toward simplification is nearly doubling the standard deduction to $24,000 for married couples, which means most taxpayers will elect not to itemize.

Far more confusing is the reform for business owners who declare income on personal returns, known as “pass-throughs,” which won a 20% deduction for some business income. Smaller businesses deserve tax relief but the deduction contains considerable risk of gaming.

For instance: A salaried manager at a corporation would pay a top marginal rate of 37%, yet a store owner gets a lower rate. This favors some industries over others, and the better route would have been cutting the top rate to the 1986 reform rate of 28%. Some lawyers, accountants and other professional services can claim some income against the deduction. And you bet they will: Look out for the college basketball coach who tries to become an LLC.

Yet Republicans deserve credit for at least trimming the top rate on individuals to 37% from 39.6%. The conferees dumped the House’s bubble bracket that slammed some folks with a 45.6% top rate. The 2.6-point top rate cut won’t increase the incentives to work by all that much, though the move is significant as a matter of principle that tax reform means lower rates for everyone. And lowering the top rate took political courage amid tendentious attacks from left and right.

A lower top rate also offers relief to productive earners in high-tax states who will lose most of the state-and-local tax deduction. That subsidy for progressive politicians in Sacramento and Albany will be capped at a $10,000 write-off for property, income and sales tax. A full repeal would have been better policy, but the accommodation brings along Republican Members in New York and California.

The worst individual tax policy is the doubling of the tax credit for children to $2,000 from $1,000. This costs half-a-trillion dollars and contributes nothing to growth because it doesn’t change incentives. Up to $1,400 of the credit will also be refundable after Florida Senator Marco Rubio staged a hostage crisis on Thursday, and this means checks in the mail to households with no income tax liability. Mr. Rubio demanded this change as the price of his vote even after his child-credit amendment lost on the Senate floor, 29-71.

The long-term politics of the credit are worse. Mr. Rubio concedes such households don’t owe income taxes but says they need relief from payroll taxes, which fund Social Security and Medicare. But the way to do that is to propose cutting payroll tax rates. Mr. Rubio’s backdoor raid means the payroll tax will be the new pot of cash to redistribute income, and entitlement reform could become that much harder.

The House and Senate compromised on the mortgage-interest deduction, which will now be capped at $750,000, down from $1 million under current law. This is a small victory over the housing lobby, but Republicans couldn’t even eliminate the deduction for second homes. Republicans also won’t repeal the death tax, though the exemption will be doubled to about $11 million. A menu of energy subsidies survives, and so does the loathsome alternative minimum tax that requires families to calculate two sets of tax assumptions.

Some of these survive due to political support and others are ways to pay for cuts elsewhere and comply with the Senate’s budget rules. One asterisk is that the cuts for individuals expire after 2025, though the political pressure to extend them will be immense, especially for middle-income families.

In better news, the bill will repeal the Affordable Care Act’s individual mandate that punishes Americans for declining to buy health insurance that they can’t afford or don’t want. This chips away at ObamaCare’s command-and-control model, and may open the door for larger reform.

***

Republicans have been promising to reform the tax code for decades, and Speaker Paul Ryan deserves particular notice for years of intellectual and political spadework. The House campaigned on tax reform with its Better Way agenda, and Donald Trump made it a 2016 theme. This bill fulfills that promise.

For eight years the Democrats put income equality over growth and ended up with less of both. Now Republicans are poised to enact a tax bill that on the whole makes broad prosperity the priority. Next week the House and Senate will call the roll and we’ll see which politicians in Washington still think America is one of the world’s great underdeveloped countries.

Appeared in the December 16, 2017, print edition.

https://www.wsj.com/articles/a-tax-reform-for-growth-1513383270

California Republicans Push to Preserve Income-Tax Deduction

December 6, 2017

Deduction was repealed by Senate and House in the bills they passed; income taxes are bigger issue in California than property taxes

WASHINGTON—Though the House and Senate have voted to repeal the deduction for state income taxes in Republican tax overhaul plans, it isn’t dead yet.

California Republicans are pushing for an income-tax deduction in the final tax bill being worked out by lawmakers in a House-Senate conference committee on tax legislation.

 

“There’s a lot of things that Californians are working on and why we said we’d move the process forward, looking to be able to make those fixes,” House Majority Leader Kevin McCarthy (R., Calif.) told reporters on Tuesday.

In November, 11 of the 14 California Republicans in the House voted for the tax bill; New Jersey and New York GOP members, with similarly high state taxes, were much more willing to vote no. The House will need to vote again, and Republicans need 217 votes to guarantee passage if no Democrats vote for the bill.

The House and Senate bills both repealed the deductions for state and local income and sales taxes, using that money to lower individual tax rates. They also preserved a $10,000 itemized deduction for property taxes.

That property-tax break was especially important to New York and Illinois Republicans who voted for the House bill. A $10,000 itemized deduction wouldn’t be used by everyone in those states. Taxpayers would likely claim it only if it helped their total itemized deductions, including mortgage interest and charitable contributions, get over the new higher standard deduction of about $12,000 for individuals and about $24,000 for married couples.

It is less useful in California, where property taxes are limited and income taxes are more important.

California Republicans would like the $10,000 cap to be higher. And they want at a minimum to let taxpayers deduct $10,000 against either property or income taxes, said Rep. Mimi Walters (R., Calif.).

“I am strongly in favor of making sure we have some sort of fix because I feel it’s very important to give that flexibility,” said Ms. Walters, who voted for the House bill. She said she didn’t know how much such a fix would cost and didn’t know whether she would vote for the final version of a tax package without something new.

Rep. Kevin Brady (R., Texas), who will lead the conference committee, said there were four or five options lawmakers were considering to address the concerns of lawmakers from high-tax states.

That includes Ms. Walters’s suggestion of letting the $10,000 be used for income or property taxes. Mr. Brady said he is also considering how to adjust the tax bracket structure.

And he is considering whether the family and child tax credits in the House bill should be changed. The House bill starts phasing out those tax breaks at $115,000 for individuals and $230,000 for married couples. That is above current law, but below the Senate’s $500,000 threshold.

“All of those options and a few more are being discussed,” Mr. Brady said.

Republicans are also debating limits on the mortgage-interest deduction. The House voted to limit the mortgage-interest deduction to loans totaling up to $500,000, down from $1 million in current law, which is also the level preserved by the Senate. Californians in expensive real-estate markets are pushing for a higher mortgage-interest deduction.

“I think it should be somewhere in between, that you can get it between or higher,” Mr. McCarthy said.

All of those changes would reduce revenue and Republicans would need to find money elsewhere to make up the difference.

Mr. McCarthy doesn’t sit on the House committee that will iron out differences between the House and Senate bills, but as a leader who played a key role in assembling the Republican majority that passed the legislation to begin with, he will be pivotal behind the scenes in the days ahead.

 https://www.wsj.com/articles/california-republicans-push-to-preserve-income-tax-deduction-1512517910

‘Death to Democrats’: How the GOP Tax Bill Whacks Liberal Tenets

December 5, 2017

Bloomberg

By Sahil Kapur

  • SALT deductions, education benefits among those under attack
  • Conservatives bolstered by other provisions in GOP tax plans
 Image result for york city, apartment, dwellers, photos, city views
 Some of the biggest losers under the Republican tax overhaul include upper-middle class families in high-tax areas like New York City, graduate students, government workers and public school teachers.

The one thing they have in common? They’re mostly Democrats.

President Donald Trump and GOP leaders have promised that the two main goals of a tax code revamp are to benefit middle-class families and to slash the corporate tax rate. But paying for those changes has come in large part at the expense of breaks that are important to residents of high-tax states, which tend to be Democratic.

Benefits used by universities and graduate students are also on the chopping block. And the repeal of the Obamacare individual mandate to buy insurance — a centerpiece of Democrats’ biggest achievement in a generation — is estimated to generate some $300 billion to pay for tax cuts.

“It’s death to Democrats,” said conservative economist Stephen Moore, who advised Trump’s campaign on tax policy.

“They go after state and local taxes, which weakens public employee unions. They go after university endowments, and universities have become play pens of the left. And getting rid of the mandate is to eventually dismantle Obamacare,” Moore said in an interview, arguing that it would accelerate “a death spiral” in the health-care law’s marketplaces.

The tax overhaul represents the GOP-controlled Congress’s best chance for a policy win this year and looms large in the 2018 congressional elections. Not a single Democrat voted for either the House or the Senate bill. No Democratic amendments were approved in committee or on the floor of either chamber — and the final House-Senate joint product is all but guaranteed to come from Republicans-only negotiations.

‘Ideological Trophies’

“The people who are going get the most whacked by this are wealthy and upper-middle class people who live in big cities,” said John Feehery, a GOP lobbyist and former communicator for House leadership. “In other words, Democrats.”

“I don’t think there’s a conspiracy to go attack Democratic districts. But that’s how the legislative process works — if you’re not going to participate in a game you’re going to lose,” he said. “You need the revenue, and those constituencies are not really being represented because their representatives refused to participate.”

Democratic lawmakers say they were shut out of a rushed process, with scant time to review last-minute changes. In a tweet shared more than 150,000 times, Montana Democratic Senator Jon Tester posted a video of himself describing his party as blindsided by the almost 500-pages of legislation provided by Republicans on Friday evening just hours before the bill passed.

“This is just one big set of ideological trophies,” Senator Ron Wyden, the top Democrat on the tax-writing Finance Committee, said after the vote.

SALT Deductions

One of the most controversial measures in the House and Senate tax plans calls for repealing state and local tax deductions — save for a $10,000 cap for property tax deductions. The benefit is most important for residents of high-tax states.

Conservatives say they hope the change will mean lower state taxes and smaller governments. “One hopefully positive result of this legislation will be that state and local officials will be less eager to jack up the taxes on hard working Americans,” Senator Ted Cruz of Texas said after the bill passed. He mentioned California, New Jersey and New York explicitly.

Democratic governors in those SALT-dependent states were furious about the provision — New York’s Andrew Cuomo called it “political retaliation through the tax code.”

In addition to hitting certain middle-class and upper-middle class families, the removal of the state and local tax break could hurt public sector jobs and programs. State and local deductions ease the burden of state taxes — without the breaks, the taxes are politically harder to impose and maintain. Public employee unions, a robust Democratic constituency, rely on state taxpayers for jobs and pensions.

“This is going to be a direct hit on us,” said Peter MacKinnon, president of the Massachusetts-based SEIU Local 509.

For some Republicans, the union anger is a feature of the plan, not a bug. Given the “high cost of unionized government employees” in states like Illinois, “the fact that government employee unions oppose reforms makes the need for them all the more clear,” said Michael Steel, who served as a spokesman for former House Speaker John Boehner.

‘Policy Not Partisanship’

House Ways and Means Chairman Kevin Brady says there’s no effort to target Democrats, and the revenue offsets are about lowering rates for all Americans.

“Chairman Brady has met repeatedly with Democrats in Congress and also union leaders and members about pro-growth tax reform. He always welcomed their ideas and their consideration during this process,” Emily Schillinger, a spokeswoman for Brady, said in an email. “On SALT, the chairman has also said that he is working to lower taxes for Americans — regardless of which state they live in. This tax reform issue is about policy — not partisanship.”

Several provisions in the tax bills could affect educational institutions. The plans call for a new levy of 1.4 percent on colleges’ annual investment income. Under the House version of the bill, U.S. schools with funds of more than $250,000 per student would be affected, but the Senate proposal raised that to $500,000.

A Cruz amendment added to the bill late would allow tax-advantaged contributions to 529 plans for private education and home-schooling expenses for K-12. The move could hurt public schools, according to the National Education Association, a teachers’ group that tends to back Democrats.

“Expanding education tax loopholes in order for wealthy families to stash away money for religious school will hurt neighborhood public schools and students,” said Lily Eskelsen García, NEA president.

Other measures in the House bill would eliminate deductions for student loans, treat graduate tuition waivers as taxable income, and prevent deductions for classroom expenses by public school teachers.

Conservatives Win

“It’s not deliberate targeting so much as the people who are likely to vote for the bill aren’t going to the mat” for issues like SALT or public sector jobs and schools, said Rohit Kumar, a former deputy chief of staff to Senate Majority Leader Mitch McConnell who now oversees tax policy for Pricewaterhousecoopers LLP. “So it becomes the path of least resistance.”

Julia Lawless, a spokeswoman for Senate Finance Chairman Orrin Hatch, said Democrats had “ample opportunity to offer input, file amendments and work to help shape the final product.”

While Democrats are poised to lose, conservatives have been bolstered by some of the tax plan’s changes.

The Senate bill opens up the Arctic National Wildlife Refuge to drilling, something Senator Lisa Murkowski had pushed for and environmentalists have been battling for years. The House legislation repeals the 1954 Johnson amendment that prohibits tax-exempt nonprofits like churches from supporting or opposing political candidates — a move welcomed by evangelicals.

The House bill also grants 529 tax breaks for parents of “unborn children,” a provision that reproductive-rights advocates fear will threaten legal abortion.

Reagan, Bush Cuts

The last major tax cuts — in the 1980s under Ronald Reagan and early 2000s under George W. Bush — were approved with bipartisan support. Until the ACA, which extended coverage to millions of Americans by imposing higher taxes on wealthy people and health industry groups, major legislation was often done with the backing of both parties.

Whatever their motives may be for particular provisions, Republicans are well-aware of their effects, said William Galston, a senior fellow in governance studies at the Brookings Institution.

“One of the definitions of justice offered in Plato’s Republic is doing good to your friends and harm to your enemies,” Galston said. “I think it’s fair to say the Republican leadership takes that definition of justice very seriously.”

— With assistance by Steven T. Dennis

https://www.bloomberg.com/news/articles/2017-12-05/-death-to-democrats-how-the-gop-tax-bill-whacks-liberal-tenets

It Started as a Tax Cut. Now It Could Change American Life

November 30, 2017

Image may contain: 7 people, people smiling, people standing

Joshua Lott | The Washington Post | Getty Images
Students walk through the hallway after classes were dismissed at Senn High School on Wednesday, May 10, 2017 in Chicago, Illinois.

.
The tax plan has been marketed by President Trump and Republican leaders as a straightforward if enormous rebate for the masses, a $1.5 trillion package of cuts to spur hiring and economic growth. But as the bill has been rushed through Congress with scant debate, its far broader ramifications have come into focus, revealing a catchall legislative creation that could reshape major areas of American life, from education to health care.

Some of this re-engineering is straight out of the traditional Republican playbook. Corporate taxes, along with those on wealthy Americans, would be slashed on the presumption that when people in penthouses get relief, the benefits flow down to basement tenements.

Some measures are barely connected to the realm of taxation, such as the lifting of a 1954 ban on political activism by churches and the conferring of a new legal right for fetuses in the House bill — both on the wish list of the evangelical right.

With a potentially far-reaching dimension, elements in both the House and Senate bills could constrain the ability of states and local governments to levy their own taxes, pressuring them to limit spending on health care, education, public transportation and social services. In their longstanding battle to shrink government, Republicans have found in the tax bill a vehicle to broaden the fight beyond Washington.

The result is a behemoth piece of legislation that could widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people — especially in high-tax states like California and New York, which, not coincidentally, tend to vote Democratic.

All of this is taking shape at such extraordinary velocity, absent the usual analyses and hearings, that even the most savvy Washington lobbyist cannot be fully certain of the implications.

Mr. Trump and the Republican leadership in Congress — stymied in their efforts to repeal Obamacare, and short of legislative achievements — have signaled absolute resolve to get a tax bill passed by the end of the year. As the sense has taken hold that Washington is now a trading floor where any deal is worth entertaining so long as it brings votes, interest groups have fixed on the tax bill as a unique opportunity to further their agendas.

“There’s a Christmas-tree aspect to the bill,” said C. Eugene Steuerle, a Treasury official during the Reagan administration and now a senior fellow at the Urban Institute. As an example, he cited the provisions in the House bill designed to appeal to the religious right.

“People want to add certain things, and if they don’t cost a lot, it’s a way to buy in agreement,” Mr. Steuerle said.

Economists and tax experts are overwhelmingly skeptical that the bills in the House and Senate can generate meaningful job growth and economic expansion. Many view the legislation not as a product of genuine deliberation, but as a transfer of wealth to corporations and affluent individuals — both generous purveyors of campaign contributions. By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee and the Congressional Budget Office.

“When you put all these pieces together, what you’re left with is we are squandering a giant sum of money,” said Edward D. Kleinbard, a former chief of staff at the Congressional Joint Committee on Taxation who teaches law at the University of Southern California. “It’s not aimed at growth. It is not aimed at the middle class. It is at every turn carefully engineered to deliver a kiss to the donor class.”

In a recent University of Chicago survey of 38 prominent economists across the ideological spectrum, only one said the proposed tax cuts would yield substantial economic growth. Unanimously, the economists said the tax cuts would add to the long-term federal debt burden, now estimated at more than $20 trillion.

If the package does have a guiding philosophy, it is a return to trickle-down economics, an enduring story line in which the wealthy are supposed to spend and invest their tax breaks, creating jobs and commercial opportunities for everyone else.

As President Ronald Reagan slashed taxes in the 1980s, he argued that citizens, not bureaucrats, should decide how to spend their money. President George W. Bush bestowed enormous tax cuts on the affluent.

But the trickle-down story has yet to achieve its promised happy ending. Only the beginning reliably transpires, the part where wealthy people get relief. The spoils of resulting economic growth have largely been monopolized by those with the highest incomes. Pay for most American workers has been stagnant since the mid-1970s, after the rising costs of housing, health care and other basics are factored in.

Nonetheless, Republicans are staging a trickle-down revival.

“Either it’s a religious belief, a belief where no amount of evidence would change that, or they are using the argument cynically and they just want more money for themselves,” the economist Joseph E. Stiglitz, a Nobel laureate, said.

Mr. Stiglitz has long warned of the perils of growing inequality while deriding tax-cutting inclinations. Yet even those who have favored lighter tax burdens are critical of the current proposals.

In the late 1970s, Bruce Bartlett developed what would become the locus of the Reagan tax cuts while working for Representative Jack Kemp, a conservative Republican from New York. Those cuts helped cushion the pain from sharp increases in interest rates by the Federal Reserve, Mr. Bartlett maintains. But Reagan was lowering the highest tax rate on individuals from 70 percent down to 28 percent by 1986.

“What they have here is a big tax cut for the rich paid for with random increases in taxes for various constituencies,” Mr. Bartlett said. “It’s ridiculous. And it’s telling that they are ramming this through without any debate. All of the empirical evidence goes against the tax cut.”

The meat of the package is a permanent lowering of the corporate tax rate, to 20 percent from 35 percent, which business leaders have long wanted. Proponents assert that this would prompt multinational companies to expand operations in the United States.

“We’ve been bleeding corporate headquarters and production for a long time,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and now president of the American Action Forum, a nonprofit that promotes smaller government.

But recent history suggests that when corporations get tax relief, they find abundant uses for money that do not involve paying higher wages. They give dividends to shareholders and stock options to executives. They stash earnings in tax havens.

In 2004, Congress invited American corporations to bring home overseas earnings at a sharply reduced rate, pitching it as a means of bolstering investment. But the corporations spent as much as 90 percent of their windfall buying back their shares, according to Bureau of Economic Analysis research.

If Congress bestows fresh relief on major businesses, signs suggest a similar result. Many companies are enjoying record profits. Those in the Fortune 500 had $2.6 trillion salted away overseas as of last year.

“In our boardroom, the number-one thing we’re talking about is not taxes,” said Jeremy Stoppelman, chief executive of Yelp, the online review platform. “Having a strong middle class out there spending money is what’s most important for our business.”

If the tax bill widens inequality, local communities will likely find themselves with fewer resources to aim at helping struggling people.

Senate Budget Committee members Sen. Lindsey Graham, R-S.C., left, and Sen. Bob Corker, R-Tenn., talk during a Senate Budget Committee hearing to consider fiscal year 2018 reconciliation legislation on Capitol Hill in Washington, Tuesday, Nov. 28, 2017. Tax bill fight brewing over ‘fiscal trigger’ among Republicans
18 Hours Ago | 02:08
A key feature of the Senate bill is the elimination of a federal deduction for state and local taxes. Conservative groups like the Heritage Foundation and American Legislative Exchange Council have sought to end the deduction as a means of reining in government spending.

In high-tax states like California, New York, New Jersey and Connecticut — where electorates have historically shown a willingness to finance ample safety-net programs — the measure could change the political calculus. It would magnify the costs to taxpayers, pressuring states to stay lean or risk the wrath of voters.

Some see in this tilt a reworking of basic principles that have prevailed in American life for generations.

Since the 1930s, when President Franklin D. Roosevelt created Social Security, unemployment benefits and other pillars of the safety net to combat the Great Depression, crises have been tempered by some measure of government support. Recent decades have brought cuts to social services, but the impact of the current bill could be especially consequential.

“This is a repudiation of the social contract that Franklin Roosevelt announced at the New Deal,” Joseph J. Ellis, a Pulitzer Prize-winning American historian, said of trimming benefits for lower- and middle-income families to finance bigger rewards for the wealthy. Health coverage would shrink under the Republican plan while multimillion-dollar estates would not have to pay a penny in taxes.

The tax cut package, for instance, could trigger rules mandating cuts to Medicare, the government health care program for seniors, the Congressional Budget Office warned. Some 13 million people could lose health care via the elimination of a key plank of Obamacare. Insurance premiums are also expected to rise by 10 percent.

“This tax bill is a grand deception,” said Arnold Hiatt, the former chief executive of Stride Rite, which makes children’s shoes. “It hurts the most vulnerable, and hurts health care and education, which are essential for a healthy economy.”

The proposals break from seven decades’ worth of federal efforts to broaden access to higher education.

Since World War II, the guiding sense has been that “it is government’s responsibility to provide higher education for all those who can benefit from it,” said David Nasaw, a historian at the Graduate Center of the City University of New York. That idea was behind the G.I. Bill, which helped generations of veterans pay for college and training.

The House or Senate bill includes provisions ending the deductibility of tuition waivers for graduate students, repealing the deduction for interest paid on student loans and taxing university endowments.

The endowment tax, in particular, threatens the ability of low-income students to pursue college and graduate studies, said Ron Haskins, a senior fellow at the Brookings Institution. Proceeds from endowments subsidize students from lower-income families, while allowing students across the board to graduate with less debt.

“When the time of reckoning comes to fix huge deficits, social safety-net programs will be first on the chopping block,” Julian E. Zelizer, a professor of history and public affairs at Princeton University, said.

“It’s very far-reaching,” he added, “but there hasn’t been much of a debate.”

https://www.cnbc.com/2017/11/29/it-started-as-a-tax-cut-now-it-could-change-american-life.html

Senators Seek Changes to Tax Bill as Busy Week Kicks Off

November 27, 2017

Pass-through business income, budget deficits and repeal of ACA mandate are all sources of friction

Susan Collins

WASHINGTON—Senators on Monday began a frenzied week of meetings, negotiations and amendments as Republicans try to find 50 votes for their tax bill.

Possible changes to the version that emerged from the Senate Finance Committee include a bigger tax break for pass-through firms such as partnerships that pay business taxes through their owners’ individual returns.

One option is allowing a 20% deduction for pass-through business income instead of the 17.4% deduction in the committee’s bill, said Sen. Ron Johnson (R., Wis.), who has said he opposes the bill unless changes are made. Mr. Johnson said he spoke with President Donald Trump and Vice President Mike Pence about the issue over the weekend.

“They agreed this is a problem to be fixed and we’ll get it fixed,” Mr. Johnson said Monday.

The bill is the GOP’s biggest domestic-policy priority, and it would lower most households’ individual taxes through 2025 and cut the corporate tax rate permanently. Some households, particularly upper-middle-class wage-earners in high-tax states, would pay more than they do now.

Party leaders are trying to push the bill through the Senate this week and get a final bill to Mr. Trump’s desk by the end of the year. They control 52 seats in the Senate, meaning they can lose just two votes, assuming no Democratic support.

Besides Mr. Johnson, several other GOP senators have flagged potential problems. Sens. Jeff Flake (R., Ariz.), Bob Corker (R., Tenn.) and James Lankford (R., Okla.) are concerned about budget deficits; the bill would increase deficits by $1.4 trillion over a decade and by even more if future Congresses extend the expiring tax cuts included in the plan.

Image result for bob corker, photos

From the Left:  Sens. Jeff Flake (R., Ariz.), Bob Corker (R., Tenn.) and James Lankford (R., Okla.)

Mr. Lankford wants the tax bill to include a mechanism that would adjust taxes in the event that Republican expectations that tax cuts would pay for themselves prove wrong.

“From Oklahoma and Kansas and those of us in the middle of the country, we have seen some of this in our own state legislatures,” Mr. Lankford said. “I think it’s important that we learn some of those lessons what we’ve seen in states, and to be able to put into place at the beginning a backstop a procedure to make sure we’re guarding against this.”

Mr. Lankford said that a number of different options were under discussion. “If the revenue is not coming in, should the rates change?” he said.

Mr. Corker has been working on a “responsible path forward” with senators and the administration, said his spokeswoman, Micah Johnson.

“While more work remains, all parties are hopeful that the final bill will be good for our country,” she said.

Sen. Susan Collins (R., Maine) objects to using the bill to repeal the individual mandate to have health insurance. As a result of that policy and the expiration of individual tax cuts, the bill would eventually make many households worse off, according to the nonpartisan Congressional Budget Office and Joint Committee on Taxation. On average, households making under $30,000 would start seeing negative effects in 2019 and households making under $75,000 would become worse off in 2027.

Other GOP senators with potential concerns include Marco Rubio (R., Fla.), Lisa Murkowski (R., Alaska), Jerry Moran (R., Kan.) and John McCain (R., Ariz.).

Sen. Rand Paul (R., Ky.) said Monday morning that he would vote for the bill, even though he would prefer a larger tax cut.

“I’m not getting everything I want—far from it. But I’ve been immersed in this process,” Mr. Paul wrote on the Fox News website. “I’ve fought for and received major changes for the better—and I plan to vote for this bill as it stands right now.”

Mr. Trump tweeted Monday morning that there would be a few changes to help pass-through businesses and middle-income households. He is slated to meet with Finance Committee Republicans Monday afternoon.

The changes for households could include allowing a deduction for property taxes, said a person familiar with the discussions. Currently, taxpayers can claim an itemized deduction for state and local property taxes and for income or sales taxes, but the Senate proposal eliminates all of these breaks. Ms. Collins has said she wants at least some state-tax deductibility allowed.

The House bill repeals the income and sales tax breaks but won some votes from Republicans from high-tax states by preserving a $10,000 break for property taxes. One option in the Senate under consideration is to match—or even exceed—the House’s property-tax deduction, according to a person familiar with the discussions.

Lawmakers are also looking at changes flagged by business groups that have been poring over the legislation. The tax package went from concept to legislation in less than a month and tax lawyers and businesses are worried about unintended consequences.

“Companies are still running their models. And I don’t know if anybody knows right now if they’re going to be worse off,” said Catherine Schultz, vice president for tax policy at the National Foreign Trade Council. “Companies are obviously talking to staff and trying to fix some of the problems in the bill, but right now [lawmakers are] much more concerned about making sure they get their 50 votes.”

Write to Richard Rubin at richard.rubin@wsj.com and Siobhan Hughes at siobhan.hughes@wsj.com

https://www.wsj.com/articles/senators-seek-changes-to-tax-bill-as-busy-week-kicks-off-1511805833