Living in the past, Trump reincarnates Reagan trickle down plan as most forward looking policy for America

Trump speaking in Detroit

Today, Donald Trump gave some specifics about his Tax plan, among other subjects, if he were elected President.  I review here what the major features of his plan includes.

Trump believes that taxes are the biggest differentiation between him and Hillary.  He repeated his campaign's rhetoric and false claim that Hillary says she will increase taxes on the middle class.

Overall, his approach to taxes is to reduce them for most people, but especially for the wealthy and Corporate America.  Although he stated that he is the future thinking of American taxes, his tax plan is to reactivate the 1980's Reagan trickle down economic policy, which many argue does not increase the number of jobs, or give wage increases to workers.  What it does do is pad the bank accounts of the extremely rich.  He spoke nothing about minimum wage increases.

The "trickle down" policy is cited as one of the major reasons for the redistribution of wealth from the middle class to the rich which caused today's income inequality.  Most of his recommendations would reduce revenue to run the Federal government and likely increase the deficit unless severe cuts are made to the social safety net or other programs thought unworthy by a Republican Congress.

For example,  Donald Trump admits that the tax code is extremely complicated but does not mention how the tax code would change, other than by reducing the number of tax brackets from seven down to three.  The three brackets would be 12%, 25% and 33%.

Donald believes that taxes and regulation on Corporate America have had the most adverse impact on reducing the GDP.  Further, he believes that reducing the already highest business tax rate of all western countries from 35% to 15% will improve the economy and spur on business investments and job growth.  The problem with that statement is that 2/3 of all businesses pay no taxes and those that do, have their taxes reduced through exemptions, deductions and off-shore tax havens to about 12.6%.  If reduction in Corporate taxes had any long term impact on increasing jobs or increasing wages, we should have already seen it.  We have not.

Not stopping there to improve the lives of the wealthy, Mr. Trump also advocates elimination of estate taxes.  This was received by a large round of applause from the audience, who apparently either are very rich themselves or do not understand that estate taxes are not paid by any family having less than a $10.8 million estate.

Mr. Trump indicates that the rich will pay their fair share of taxes, but this is very subjective.  Mr. Trump did not get into details on what constitutes a fair share.  For example, if a Corporate CEO who enjoys a $15 million annual income shelters $14 million of it in offshore tax shelters, does he pay tax on the $15 million or $1 million?  Even if he finds legal ways to protect most of that income, what constitutes a fair share?

One tax advantage offered that could favor working women is elimination of all child care expenses from taxes.  Again no specifics but on the surface, it appears that provided you have a job and a child in day care, your child care costs might be deductible from your gross income and not be subject to a tax.  The average cost of child care for working women is about $200 per week, so this has the potential to save over $10,000 from being taxed.  We'll have to see how a Republican Congress would find this proposal, but if history is any indicator, Republicans are not very generous appropriating money for such social reasons.

For example, on the subject of equal pay, if Republicans in Congress passed equal pay legislation, women's wages would be increased by about 30%, potentially increasing the take home pay by much more than $10,000.  That has been rejected by Republicans more than once.  My guess is that Trump's child care deduction will be solidly rejected if Republicans stay in control of Congress.

Donald indicates that more about his tax policies can be found on his website.

Fed Chairman Bernanke's report to Congress

Ben Bernanke

Federal Reserve Chairman Ben Bernanke met today with Congressional leaders of the Financial Services Committee to report on the Federal Reserve's take on the state of the economy and Federal Reserve actions in that regard.

In an introductory statement Mr. Bernanke made it clear that the fiscal policy that legislators have chosen to take has been a detriment to the economic recovery.  In an effort to acknowledge the impact that a dysfunctional Congress has on the economy, he highlighted that tight fiscal policy will restrain economic growth.  He warned that political fights over raising the debt ceiling as has happened in the past would hamper the recovery.  Although a few of the Congressmen on the committee appeared to understand the importance Congress has in assisting in the recovery, it is still to be seen if Congressional Republicans take this guidance into consideration as they enter discussions about raising the debt ceiling, ending sequester or resurrecting the American Jobs Act.

Bernanke believes the economy is recovering at a moderate pace.  He cited the improvements in the housing market as contributing to economic gains and predicted this would continue to improve notwithstanding recent mortgage interest gains.

He believes the labor market is improving gradually and contributed a 0.1% drop in the unemployment rate to the Fed's policies of buying assets.  He admits that job growth has a long way to go to be considered satisfactory.  As I have stated in previous blogs, I question the impact that buying assets really has on the job market especially because it does nothing to increase demand for products and services.  It does have an important impact on the stock market as we have seen investors sell off stocks and bonds when Bernanke hinted that the asset purchase program was going to be discontinued.

Understanding the emotional nature of the stock market, Bernanke was careful not to repeat the mistake of hinting at a change in the asset program at the committee meeting.  He emphatically stated that the current asset purchase program will continue and monetary policy will be "accommodative" for the foreseeable future.  As of noon today the US markets appeared to be unaffected by Bernanke's comments.

In order to help prevent another Bush era financial collapse of the big banks, Fed policy is to prevent  collapse by increasing the requirement for cash reserves under what is called Basel III capital reforms.

 In summary, Bernanke explained three mechanisms that the Fed is using to support economic growth.  These are mortgage asset purchases, forward guidance on Fed plans for the federal fund rate target and Basel III capital reforms.

Based on the comments at the committee meeting, it appears obvious that the Fed needs a lot of help from Congress to revitalize the economy.  Bernanke's warning about Congressional actions around fiscal policy may have been his cry for help.

A Republican to English dictionary

Although born and raised in the United States, my father, who passed away in his old age a few years ago, was not really good with the English language.  Sometimes he used words that he made up in conversation that sounded like words that they really weren't.  My kids were often confused by their "Papa", as they used to call him, and I would joke with them that maybe we needed to get a Papa- to-English dictionary.

Because of their support for policies which Republicans stand for, most of which go against their best interest, middle-class Republicans may be well served if they had a Republican-to-English dictionary.  Perhaps that way they could better understand that their welfare is not of concern when it comes to modern Republican politics.

Here are a few examples of statements we have heard our Republican leaders talk about.  I have given some assistance to the American voter by attempting to identify the true meaning of these words in plain English.

"Jobs, Jobs Jobs": Cheap foreign labor for America's Corporations.  

"Support for our troops": Increasing government funding of defense contractors.

"Reducing the deficit":  Protecting the 1% by taking revenue off the table, increasing military budgets to protect defense contractors and only calling for government spending reductions in programs for the poor, women, children, the elderly, students, the handicapped, military veterans and the unemployed.

"Smaller Government": 1. Eliminating government protections of it citizens in regards to regulations on business so that big business can operate with a free hand to decrease costs involved with making a safe product, protecting the environment, giving fair wages, creating a safe work environment, treating workers fairly and otherwise operating responsibly.  2. Reducing government spending by eliminating public service jobs such as teachers, police, fire-fighters and government workers and rejecting the American Jobs Act that would have improved the infrastructure of roads, bridges, schools, etc. 

"2nd Amendment rights": Returning the favor for NRA lobbyist money and preserving the market and demand for weapon manufacturers regardless of the wishes of the majority of Americans for stronger gun laws.

"Obama-Care": Originally a Republican introduced derogatory term for the Affordable Care Act which later became adopted as a catch-phrase by President Obama.  Republican intent is to put fear into American citizens and protect big insurance corporations from the effects of treating American citizens with fairer insurance rules and charging costs that would benefit the citizen.  Most of the effort of the Republicans in the 113th Congress has been in attempting to repeal Obama-Care law 37 times as of this date.

"Sequester": A Republican plan since 2010 to reduce the size of government in a way that would protect the wealthy and would otherwise never be possible by normal legislative proceedings.

"Filibuster": The cornerstone of Republican obstructionism used to prevent problem resolution, slow down progress on legislation and block President Obama's appointees and ideas that support middle-class Americans.

"Balanced Budget": A financial plan that reduces spending on useful government programs such as medicare, medicaid, the social safety net and social security which must not be balanced by any increase in revenue, especially by increased taxes on the wealthy or corporations. 

"501(c)4": Republican worked loophole in the IRS regulations that permits a political action committee to receive donations that are exempt from federal taxes and then to complain when the IRS workers request information that may prove they are political action committees.  The 501(c)4 is supposed to be for non-political social organizations.

"Stimulus package": Another name for the American Recovery and Reinvestment Act.  An act carried out by the Democrats and President Obama that saved the country from financial collapse.  Republicans voted against the stimulus package.

"Voter ID": An attempt to reduce access to voting by members of the citizenry who would not vote Republican in elections.  This action as well as closing down voting precincts and voting hours were used by Republican state legislatures as a strategy in the 2012 elections.

Republicans have proven that they do not represent the middle-class or the poor.  If you are in one of these groups and you vote Republican, I would be interested in knowing why you would vote that way.

If you have any other definitions, please feel free to add a comment.  I'll add the best one's to my collection.

Why the Republican Party is destined to become extinct

Extinct Dodo Bird

As certain as the extinction of the Dodo bird, so is the imminent extinction of the Republican Party.

"What!??" you say.  The Republican party has survived the test of time and is a powerful machine that can't be stopped.  How can the party be destined for extinction?

Glad you asked.

The decline of the Republican party popularity is obvious in the polls and related to their obstruction in Congress for the most part.

Although the radical right wing of the Republican party, called the "Tea Party" deserves much of the blame for the party's loss of popularity, the acceptance of that faction by the moderate Republican membership is being seen by outside observers as the new direction of the Republican party as a whole.

In many respects this is probably a correct perception since the Tea Party Caucus still exists and some members of Congress who have been members of the Tea Party Caucus hold powerful positions on some committees.  I don't think the majority of voters know who in the Republican party is a Tea Partier, yet a large number of Tea Partiers lost seats in the last election.   From the stand-point of the American voting public, the Tea Party and hence the Republican Party may be losing support.

A lot of the personality of the Republican party is still coming from Tea Party members.  The party is inflexible.  It is obstinate and over-reaching.  It does not keep promises.  It is deceitful.  It is bigoted.  It is self-serving.  It is anti-intellectual.  It is uncaring.  It is war-mongering.  It is misogynistic.

The party refuses to accept or pass most Democrat introduced legislation.  They have become famous for being the party of obstruction.  Their overall approval rating in most polls is devastatingly low and around 20% as of this writing.

If you are a politician and the people don't support you, then you should be worried about losing your job.  The fact that most are not worried and continue to act the same way could show how anti-intellectual they are, but because the Republican side of the House has gerrymandered state voting districts, they are fairly sure that their actions represent the majority of people in their districts and they will be re-elected.

The party is populated with leaders who constantly re-invent the wheel and make it a lot less round each time.  Republican political leaders have re-written the workings of the female reproductive system.  They refuse to accept any scientific findings about climate change.  They believe science manipulates data to derive their own self-serving facts.  Needless to say, an overwhelming number of scientists do not belong to the Republican Party.

Republican leaders like John Boehner have said the number one issue for Republicans is "jobs, jobs, jobs."  Yet republicans have done nothing to create jobs.  They stick to the claim that Corporate America would create jobs if we don't tax them, even though Corporate America has given away millions of jobs to third world nations and incoming third world nationals over the last thirty years.  This is deceitful and just another way that Republican leaders show that they do not really mean what they say.

Republican leaders have recently publicly announced bigoted remarks such as calling gays "filthy homosexuals" and calling immigrants "wetbacks."  The White Student Union recently attended the Conservative Action Council where it's leader supported segregation and slavery.

KKK emblem

Without even thinking about the number of Republicans in the KKK, Republican bigotry is becoming more obvious since President Obama has been elected.

The Republicans in Congress appear to hate the fact that a black man could be the President.  They met even before President Obama's inauguration in 2008 to agree to block all legislation he introduced to make him a "one term President."  Failing that, they have continued their obstructionist actions to deny the President any successes.  They are now attacking the Affordable Care Act by voting for a 37th time to repeal it and in the process wasting $55 million of taxpayer money that could have otherwise gone to other more fruitful uses.

Their obsession with causing harm to President Obama includes casting rumors and suspicions of his personal involvement with recent controversies concerning the Benghazi attacks, the IRS review of 501(c)4 tax exempt organizations and Department of Justice obtaining AP members telephone records.

The uncaring attitude of Republican leaders is aptly represented by the introduction of the Ryan Budget which slashes social programs in favor of tax advantages for the wealthy.  Mothers and children who have little to eat rank far below the Republicans favorite person, the wealthy Corporate CEO.  In order to save America with so-called jobs, Republicans will ensure that their favorite persons increase their wealth while much of America starves.  Meanwhile Corporate coffers have become overflowing with cash while jobs are nearly non-existent.

The Bush administration brought us the Iraq and Afghanistan wars.  Had Mitt Romney won the 2012 Presidential election, Iran may already have been invaded.  We saw the clamoring in Congress when it was suggested that Iran might already have or very soon acquire nuclear weapons.  Republicans see war as a means to benefit their wealthy supporters who happen to own and operate companies involved in the weapons of war.  This explains their anxious dialog about going to war and funding war, while their legislation prevents the American victims of war and the veterans of war from getting assistance in returning to civilian life.

Republican leaders, where they control state legislatures and governorships have shown their misogynist side.  Republicans in Congress have stood against the Violence against Women Act.  Other Congressional actions to obstruct or defeat certain social programs will have an impact on women and children.  Wisconsin has passed repeal of equal pay for women.  North Dakota's Governor and other state governors have signed bills which many consider unconstitutional, to reduce women's access to reproductive rights services.  Even though Roe v Wade is law, Republicans in Congress and in the States have managed to restrict the intention of the law.    

Many Republican policies can be explained by what they are against.  They are anti-middle-class in their favoritism to the wealthy at the expense of the middle class.

They are anti-women in their fights against women's rights.

They are anti-gay rights in their opposition to marriage equality legislation.

They are anti-student in their votes against funding Pell grants.

They are anti-urban voter in their fight to make voting more difficult with reducing voting hours and requiring voter ID cards.

They are anti-student voter in their legislation to prevent students from voting in the state where their college is located.

They are anti-labor by their fights against the national labor relations board membership.

They are anti-jobs by their activities to block President Obama's American Jobs Act.

They are anti-consumer by their blocking the Presidential appointment of a Director for the Consumer Financial Protection Bureau.

They are anti-Christian by insisting that social programs for the weakest of society be cut in favor of tax breaks for the wealthy.

They are anti-elderly by their demands for changing Medicare and Social Security which will hurt the elderly.

They are anti-poor people for fighting to repeal the Affordable Care Act which covers millions of formerly uninsured persons and improves patient treatment by insurance companies.

They are anti-veteran by preventing government aid to injured veterans and blocking assistance in finding jobs after serving their country.

They are anti-immigrant by failing to pass immigration reform.

They are anti-family by failing to protect children and families from gun violence by their actions to prevent improved background checks for firearms.

My guess is that the total number of people who Republicans are failing to represent amounts to nearly 98% of the country.  The reason they have not been voted out of office yet, I blame on the "one-issue" Republicans who continue to vote them in.  One-issue Republicans are those voters who dispel any other adverse effects of having a Republican represent them provided they cover their one major (usually social) issue of concern.

Remember Romney

The specific social issue may vary from voter to voter.   Republicans have done a good job in recognizing and appealing to those issues.  These issues include but are not limited to such things as gun rights, right to life, small government lie, no new taxes lie, the moochers syndrome and the job creators lie.

Convincing the voter that Republican policy will benefit them is greatly assisted by the Republican knack for lying to the public guiltlessly about anything that advances the Republican cause.  Fox news and other radical right wing talk show hosts contribute to this and may actually be hurting the Republican party more than it knows.  Lest you forget, remember the lies of the Romney campaign?  The same political infrastructure that led Romney is still leading the Republicans in Congress.  Romney lost the election but we are still being inundated by his policies...because they are Republican policies.

Ultimately, once the majority of one-issue Republican voters start to realize that it is in their best interest to evaluate all of the issues, the extinction of the Republican party will begin.  I think this process has already started and expect that we will see some of the results of this in the 2014 Congressional elections.

I'll bet you $10,000.  (Not really.  That's how I remember Romney ;-)

Sequestration: How has it affected you?

On March 1, 2013 Congress allowed the United States to fall victim to one-sided, across the board government spending cuts.  The sequester is one sided, because revenue is not an element.  It is across the board, because most government spending accounts will be cut back without consideration for the importance of the spending.

Ironically, Congressional salaries are unaffected by the cutbacks even though that element of government spending is assumably one that most of America would agree should be cut.

The effects that the sequester will have on American society and the economy has been varied depending on the source of the observation.

Democrats, including the President have expressed grave concerns that society and the economy will suffer as a result of the cuts.  Although the President has said  the economic effects will not be catastrophic, he issued concerns about a sluggish recovery and has pointed out that certain individuals will suffer as a result.  Being a President of all the people, he has concern for those who depend on the government for essential services.

Republicans, including House speaker Boehner, have essentially welcomed it and expect it will go a long way to reigning in the wild spending that the government has supposedly become accustomed to and which otherwise would have, in their opinion, ruined our economy.  Never mind that the facts prove otherwise.  Republicans have been planning the sequester in their arsenal of tools to eliminate government for a few years now.  A powerpoint slide prepared by John Boehner shows this was a Republican plan since 2011.

With Boehner being a leader of the Party that protects the assets of the rich, he expressed his demands in Congress that any substitute for the sequester would not include an increase in taxes or closing tax loop holes for the rich.  In my opinion, Republicans in Congress follow two philosophies that are essential to their existence; a "head in the sand" philosophy and an "out of sight, out of mind" philosophy.

Regardless of the opinions of others, I want to give you a chance to record the impact that the sequester has had on you.  For that reason I have created the poll at the top of the side-bar.

The poll questions are intended to be answered by American citizens, however citizens of other countries may respond if they believe the American sequester has an impact on them.

A few explanatory notes about the poll questions:

You can only select one answer, so please try to select the most accurate answer for your situation.

I used the term "essential" to describe government services, without which you are severely affected either physically, medically, psychologically, educationally or financially.

I used the term "nice to have" to describe government services, without which you suffer some form of minor inconvenience, such as waiting longer in TSA screening lines at the airport.

I realize that the effects of the sequester may become worse on particular individuals as time goes on, so if you have not voted, please feel free to take the poll at any future date.  You can see the results of the polling at any point in time by visiting any blog on my site.  I will record the results over time and report back on the time related results in a future blog.  In the past, blog polls have not received a lot of responses, but I encourage you to participate in this important research.

Thank you for your participation.

How Republicans plan to transform the President's budget into the Paul Ryan budget

Republicans in Congress still can't seem to realize that their Party did not win the Presidency in 2012.  And by that I mean they still do not understand and do not represent the expectations of the American people.

One example of this is HR 444 REQUIRE A PLAN Act that was discussed today in the House.

Parenthetically the Act also adds the insulting attack remark erroneously directed towards the President, that it can also be called the "Require Presidential Leadership and No Deficit Act."  My guess is that the Republicans see leadership as making strong cuts into social programs to hurt the Americans who can least afford it and who most depend on it.  This would follow right in step with the Ryan budget and Republicans misguided thinking that revenue is off the table in budget talks.

Mr. Price

The Act introduced by Republican Mr. PRICE of Georgia (for himself, Mr. RYAN of Wisconsin, Ms. JENKINS, and Mr. SESSIONS) requires that, "if the President’s fiscal year 2014 budget does not achieve balance in a fiscal year covered by such budget, the President shall submit a supplemental unified budget by April 1, 2013, which identifies a fiscal year in which balance is achieved, and for other purposes."

It goes on to require that the supplemental budget include budget information required by US code but also include the Republicans wish list of items.  These are (a) An estimate of the fiscal year in which the supplemental budget is not expected to result in a deficit; (b) a detailed description of additional policies needed to accomplish no deficit; and (c) detailed description of the differences between the President's FY 2014 budget and the FY2014 supplemental budget requested.

There is no constituional requirement for a President to offer a budget which will balance by some future date.  Since the 1920's there have only been about three occassions where a budget actually did balance.  However Republicans appeared to be confused about the President's intentions.  They made it seem that this was a simple request that would help them understand where the President stands on balancing the budget.  But what are they really trying to do?

The reason that the Republicans imply they are proposing this Act is because the President's actions during his first term have shown he is not a good financial stewart.  The Act's section on "Findings" indicates that the President can't keep to his promises and has caused the deficit to rise during his term.  It's almost as if the President has authority over financial and budgetary policy and total control of the money that he was charged to spend and spent it unwisely.  Oh wait, that is the job of the Congress!

So what are the Republicans really trying to do by placing this Act into consideration?  I think they have a somewhat sinister plan in mind indeed.

CBO estimates of deficit causes

First, they are trying to create an image in the eyes of Americans that removes themselves from any blame they may have for the country's financial condition.  They won't admit  that it was their Party's administration that got us into the financial situation we are in and largely responsible for the deficit.  The graph at the left is the Congressional Budget Office's estimates of the factors leading to the deficit.  One can see that the largest contributors to our present deficit are the wars and Bush era tax cuts.  But deficits were not that important to Republicans when their guy was President.

Republicans pretend to be the only Party concerned with future generations who will be responsible for the deficit's payback.  While he was Mitt Romney's running partner, Paul Ryan's first budget plan would not balance the budget for thirty years.  And that one was considered harmful to the poor in society and the economy because of the magnitude of its cuts to social programs while at the same time cutting taxes for the rich.  Recently Ryan has been tasked by John Boehner to write a budget that will be balanced within ten years. Without considering revenue increases (as the Republicans believe), Ryan's new budget would start hurting people immediately.

It seems to me that with HR 444 and the previously passed HR 325 that temporarily raises the debt limit with stipulations for "No Budget/No Pay", Republicans are trying to force the President into cutting the social safety net, voucher-izing medicare and medicaid and making changes to social security that would not benefit the American worker.  All of these were Romney-Ryan policies that Americans rejected when they ended Romney's political career in the last election.

Ryan's Budget paves the path to
increased Prosperity for the wealthy

Republicans are really putting the cart before the horse if they think that the President can create a supplemental unified budget without Congress first acting on modifying the tax code and closing loop holes. The President cannot know the impact that new revenue will have to paying down the deficit  until Congress acts on tax law.  So once again Congress needs to understand that tax revenue must be considered and they have a more urgent role in addressing that than the President has to give them a supplemental unified budget.

Fortunately some Democrats understand that Republicans are trying to force a budget that looks like the Ryan budget and have added amendments to the Act to counteract this intention.  Unfortunately none of them was allowed during the actual rules committee session.

Mr McGovern of Massachusetts, a member of the committee made it clear that the members were only made aware of HR 444 on Thursday and the act was not entered until Friday last week.  He felt that there was not enough time to enter amendments.  He also made the point that the rules committee did not have any meetings, markups or open discussion around the need for the act and requested that it was entered into open rules.  That was voted down.

Mr Connelly of Virginia had submitted an amendment that prohibits "additional solutions" in the unified supplemental budget to include conversion of Medicare into a voucher program. However that amendment was not allowed.

Mr. Deutch of Florida submitted an amendment that removes social security from the definition of "Unified Budget" however that amendment was not allowed.

Jackson Lee of Texas submitted two amendments.  One protects the safety net of the most vulnerable in society.  It was not allowed.  The other proposes ending the estate and tax provisions so the applicable exclusion amount is allowed to revert to $1 million and the tax rate is allowed to be 55%.  It was not allowed. 

Chris Van Hollen from Maryland submitted an amendment to replace the entire sequester for 2013 which would cause deep cuts to domestic priorities and defense with a savings from specific policies that reflect a balanced approach to deficit reduction.  He wants to protect the most vulnerable and asks people making over $1 million to contribute more.  He wants to eliminate agriculture direct payments and cut subsidies to large oil companies.  Because he was not present due to his father's death, his substitute for sequester was voted down.

An amendment was submitted by Mark Takano of California which makes changes to the "Findings" section of the act.  He wants clarification that Congress holds responsibility for passing budgets and appropriating funds.  A responsibility that some Republicans have attempted to side-step.  That one was allowed.

Four Republican amendments were approved.  All of them require additional work from the Presdient to present more detail in the supplemental unified budget.

President Obama

As the President has stated publicly, like the Republicans, he also understands that the deficit should be brought under control.  Actions taken since his administration started have reduced the Bush deficit each year and the CBO expects that the deficit will be below $800 Billion by the end of 2013.

But in the President's case, his concern is that deficit reduction be done in a balanced approach with revenue increases and program cuts that do not harm the economy, that do not hurt Americans and are done fairly.

The divergence in the President's policies and Republican policies are fairly obvious to middle class Americans.

That's why he won the election.

From Romney's Official Web Site - His Tax Plan explained

Romney and Ryan

While on the Campaign trail we hear a lot of platitudes and rhetoric from Romney and Ryan but very little factual information on how they plan to improve our economic condition.  The Romney tax plan has been one of these kinds of issues.  

So for this session, I will review the actual facts as presented by Romney on his official web site, http://www.mittromney.com  When I am done, I think you'll understand why he is so quiet about it on the campaign trail.  Those lines that are in quotes are extracted from Romney's web site.  Those lines that follow the quoted lines are my explanatory comments.

“To repair the nation’s tax code, marginal rates must be brought down to stimulate entrepreneurship, job creation, and investment, while still raising the revenue needed to fund a smaller, smarter, simpler government. The principle of fairness must be preserved in federal tax and spending policy.”

“Lower marginal tax rates secure for all Americans the economic gains from tax reform.”

The following paragraphs cite the various steps in Romney's plan.

Romney's Tax Plan For Individuals:

“Make permanent, across-the-board 20 percent cut in marginal rates"

Marginal rates have the greatest effect on the wealthiest of taxpayers. A twenty percent rate cut is a huge amount but only makes a real difference to the wealthiest among us.   Add to that the tax loop-holes that are only available to the wealthy and soon middle class America will not only be paying a higher tax percentage than the wealthy, but some may even pay more in absolute tax dollars than the rich.

“Maintain current tax rates on interest, dividends, and capital gains”

The categories of income included in interest, dividends and capital gains are used almost exclusively by the wealthy. The current tax rates for these are very low with capital gains as low as 15%. With the many tax loop-holes available to the ultra-rich, this tax rate is already lower than that for most wealthy taxpayers. The point is that this tax favoritism is again directed toward the rich. Most of the middle-class will have almost no tax savings at all because they do not have income from investments.

“Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains”

Again, these categories are already non-existent for most middle-class Americans. The estimated AGI income of the Middle class Americans is around $50,000. About 94% of America has AGI less than $100,000.  Ask yourself how much of your taxable income (not 401K investments) comes from cash stock trades done throughout the year.  Do you understand that Romney's plan is targeting benefits for the wealthy?

“Eliminate the Death Tax”

This tax is already non-existent for middle class Americans unless an individual has over $5,000,000 in assets.  And who do you think would benefit from such a tax elimination? Let me give you a clue.  It is estimated that the heirs of the each of Koch brothers would benefit by nearly $8 billion dollars if this tax was eliminated

“Repeal the Alternative Minimum Tax (AMT)”

The AMT is paid only if the regular tax amount would be less than the AMT amount. It is not used in addition to the regular tax rate, but as the name implies, as an alternative to the regular rate. It is normally required by individuals and Corporations with incomes over $200,000. Since Romney is proposing to make the regular tax rates for the wealthiest individuals much less, he must repeal the AMT, or his favoritism to the wealthy would be over-ridden by the AMT. So this strategy is not to benefit the middle-class, but instead to ensure that his tax favoritism for the wealthy stays in tact.

Romney's Corporate Tax Plan:

“Cut the corporate rate to 25 percent”

Romney's tax plan for Corporations calls for a 10% reduction in tax rates. Similar to the plan for wealthy individuals it goes without saying that Corporate Tax initiatives would favor the wealthiest in America. It has very little benefit on the middle class. No jobs will be created because Corporations have their taxes cut unless demand increases. The American worker is the source of nearly 75% of the demand in America. Reducing taxes for the rich will only benefit the rich as it has for the last thirty years with very little improvement in jobs or take-home pay for workers. When more workers are employed and wages are improved, demand will increase. This starts from the middle-class out and not from the top down.

“Strengthen and make permanent the R&D tax credit”

This tax advantage is intended to increase spending on Corporate Research. It is difficult to know how much of an impact that this tax credit has had on the economy but it is known what kind of tax advantages are had by Corporations because of it. A study by Ernst and Young in 2005 reported that 17,700 Corporations claimed $6.6 Billion in R&D Tax credits.

“Switch to a territorial tax system”

This is Romney's way of allowing American Corporations to escape paying taxes on any business carried out in foreign countries. A territorial Tax system is one that only taxes income earned in the United States. This would be a huge loop-hole for Corporate America to escape paying their fair share of taxes. It is difficult to estimate how much revenue would be lost since it would likely change Corporate practices to take advantage to the greatest extent possible.  It is easy to say that the reduction in Corporate tax revenue would be extremely high and outsourcing of plants and jobs would likely be increased to the max.

“Repeal the corporate Alternative Minimum Tax (AMT)”

For the same reason as the individual AMT repeal, this would be necessary if Romney's other reductions in taxes are to be effective in reducing taxes for the wealthy.

Ultimately, Romney's tax plan would favor the wealthiest of Americans and do little for the middle class.  With a territorial tax it may even hurt the middle class by taking more jobs out of the country.  And who do you think will get stuck paying the taxes that are being lifted from the rich?  You guessed it...Middle-class America.

If you hear Romney and Ryan proclaim that they are for the middle class during their campaign tour, now you'll know that they are both compulsive liars who will say anything to get your vote.  

Like sheep to the slaughter, millions of our middle class American Republicans are being led astray by the slick double-talk of their so-called concerned Republican leaders.  

Save your vote and your job.  Vote a total Democratic ticket this November.

As anxious as I am for the release of the iPhone 5, I'm even more anxious for the release of Rmoney tax records on September 28th.

Today, CNN reported that Price Waterhouse Cooper's (PWC) Franklin, TN, the Republican Campaign and the Democratic Campaign offices received a package from an anonymous person who claims that Mitt and Ann Romney's tax records were stolen from the PWC office and will be released to the Public on September 28th.  PWC is an accounting firm that is often used for complex tax returns.

Some of the details of this break-in are reported by the group or person who claims responsibility on the website called "pastebin.com" which you can find here. 

Although CNN claims that the group is holding the data ransom for $1,000,000, there is no mention of this in the letter posted to the paste bin site.  Perhaps this info was included in the package left with PWC, or perhaps was just made up.  This was not clear as of this writing.

The Secret Service is reportedly involved in an investigation.

It was not certain if this was a scam or a real incident, but the Republican and Democratic Campaign offices both did report receiving the package which they purport to not have opened.

I guess time will tell.

Deciding factors that create jobs

Republicans advocate reducing taxes on the job creators as a viable means to grow jobs.  They claim that burdening job creators with additional costs will reduce the likelihood that they will hire.  I like to call this the "job creator lie" because it is nothing more than a Republican empty threat.  Greed is the source of the lie.  It is intended to prevent government taxes on the wealthy, ruling class who apparently are teetering between great wealth and possible financial ruin and taxes would make all the difference.

Are taxes really the major determining factor preventing job creation?  Certainly not.  Studies have shown that there is absolutely no correlation between taxes and job creation.  In fact, some have reported that in times where the rich have had to pay higher taxes, more jobs have been created.  You can rest assured that taxes are not the reason that Republicans spread this job creator lie.

So let's assume that greed is the main reason for the lie.  What then are the factors that really play a part in job creation?  Some factors like supply and demand appear obvious.  There are many theories behind how these two factors interact.  But which is most important?  And are there any other factors like cost of labor or business owner's wealth?

When a business is started, it is assumed that markets have been evaluated and the product or service is something of value which consumers will purchase.  Some estimate of the demand and the profits are made in a business plan and start-up funding is found.  Eventually people are hired to operate the business and the first jobs are created.  In some large businesses there is a choice of hiring from an American workforce or a foreign workforce.  Because patriotism is not a belief of many profit motivated businessmen, where it is possible it is an easy choice to hire cheaper labor from foreign sources.  So even when a new business is started, American job growth is not guaranteed.  In that way, business owner's wealth and cost of labor is an important factor determining where jobs will be created.

Simply stated, job growth usually happens when a business has a product or service which has demand that exceeds the supply or when the demand for a greater number of products or services offered exceed the capacity of the existing workforce.  The important word is "demand."

When we talk about demand sources, we are talking about the consumers who mainly are also the workers in America.  The major factor which affects consumer demand is consumer pay.  Pay comes from jobs.  When Americans do not have jobs or when those that have jobs are not paid well, American demand for products will decrease.  This decrease in demand cannot be overcome by making more products.  It cannot be overcome by reducing taxes of the wealthy business owners.  It cannot be overcome by producing cheaper products in a foreign country or by foreign workers in America.  It can only be overcome by finding new markets or sources of demand.

For many businesses this is not an option.  As demand decreases, so do the profits of that business.  Without new sources of demand, the business is forced to take drastic actions.  Perhaps first trying to increase demand by reducing the price of products and then by reducing the workforce to be more in line with the decrease in demand.  Eventually it may mean the business is sold off to a venture capitalist or becomes bankrupt and fails.

Businesses need consumers.  The loss of demand is a bigger threat to them than any increase in taxes.

There should be a synergy between the executives and the workers in a business where both parties are aware of the importance each has for the other.  In recent years workers wages have stayed stagnant while executives wages have increased 300 percent.  The greed that is implied in these statistics is as much a cause for the loss of demand and resultant loss of jobs than anything else unscrupulous business owners have done.

It is time that American workers have been made whole again and received the importance they deserve  in this relationship with business.  President Obama's policies are the greatest hope we have to restore jobs to Americans, revitalize the economy and return demand to businesses.

Having Mitt Romney in the 2012 Presidential Race could be the best thing that has happened to America...but not for the reasons you may think

Having Mitt Romney in the US Presidential race could be the best thing that has happened to America.      

OK, so you support Mitt Romney and toe the Republican line and probably couldn't agree more.  Sorry to disappoint, but that's not the reason for my introductory statement.

The reason it's a good thing is because America gets to see that the tax laws of this country unfairly favor the rich and legally allow them to avoid paying their fair share of taxes.  We have heard Romney claim he has paid all the taxes he is "legally" obligated to pay.  Some of us have heard of situations where some Corporations pay no taxes.  We understand that there is a maximum tax rate and an "effective" tax rate.  This effective tax rate is usually after the legal loop-holes have been utilized to reduce the maximum rate to Romney's "legally" obligated rate.

The rich may even be involved in some "creative" tax avoidance activity that legally runs amuck, such as what might have happened with Romney's IRA.  And now we may get to see this play out in Congressional hearings with Romney or his tax advisors as litigants.

Some Democratic members of Congress have formally filed an official request for an investigation into the activities of such wealthy people as Romney who have found ways to stash upwards of $100 million dollars into their IRA accounts.  See this link for the actual letter sent.

Since the average American can legally only deposit $6000 annually (in 2012, if age 50 or older) into an IRA, it is important to know if the actions of Romney and potentially other Americans are illegal.  I have previously speculated on one illegal way that this could have happened in an earlier publication.  See this link for the original story.

Even if the practice is found to be legal, it could make a big difference in the amount of tax revenue collected.  The US Treasury Department may want to seal up this loop-hole.

Perhaps the government is debating on whether to have these hearings now or wait until after the election.

If they have them now, it may cause havoc in the Republican Party, especially if Romney is found to be guilty of tax evasion.  If they lose their Presidential candidate, they will be forced to find an alternate, and we the people will have to go through the learning curve all over again.

If they wait until after the Presidential election, since there are two possible outcomes, it could make a difference to history.  In the one case where Romney loses, he will just be punished as a citizen criminal.  However, if he wins the election, he will have to be impeached.

I'm thinking the government will wait until after the election to carry out this investigation, betting that Romney will not be elected.

How to shelter $100,000,000 in an IRA

Recent controversy over Mitt Romney's tax returns has included questions over his IRA (individual retirement account) which is reported to contain well over $100,000,000.

For those of you who do not have an IRA, it is important to note that regulations impose a $5000 limit to the annual contribution that an individual can make to it and even less than this was allowed in the years before 2012.

If Mitt Romney worked at Bain Capital for 25 years, then at the current allowable deposit amount and excluding interest, Mitt's principal would grow to $125,000 in that time.  Yet Romney has nearly 1000 times that amount in his IRA.  So let's say that the investments made by the IRA gave Romney a 15% return each year.  After twenty-five years that IRA should contain about $1,600,000.  Still a far cry from $100,000,000.

So how could Romney's IRA contain so much more?  Allow me to speculate.

When Romney founded Bain Capital, it was created as a Private Corporation.  Legally, Private Corporations do not have the financial transparency that Public Corporations have.  The stock of the Private Corporation is not sold to the public and usually remains under the ownership of the partners of the Investment firm.

The United States Treasury Office began to see a phenomenon occurring with Private Corporations around year 2000.  In increasing numbers, Private Corporations began to find tax shelters to protect their profits from United States taxes.  Additionally, certain stock based compensation plans did not comply with what IRS called "deferred compensation" tax rules.  For example, certain individuals were given stock options with an exercise price that was less than the fair market value of the company's common stock.  To block this practice after year 2000, regulations were adopted to add an additional 20% tax on these transactions.  The idea was to discourage evading taxes by writing regulations that made it less profitable to do so.

In certain companies (Bain may be one of them), under-priced stocks were given to the owners and directly deposited into their IRA accounts.  So let's say the $5000 limit on the IRA deposit was achieved by under-pricing these stocks by a huge amount.  For example, let's speculate that the per share fair market value of the stock was $50.00 but the owners got shares deposited into their accounts at $0.10.  In that case, the number of shares at the fair market value is 100, but at the reduced price is 50,000.  For reporting to the IRS, the Individual Retirement Account meets the regulations and only $5000 is reported as being deposited.  Yet in reality, the true value of the number of shares is 50,000 shares x $50.00 per share = $2,500,000.  

Repeat this year after year and you will soon have $100,000,000.  Even if you do not reduce the price of the stock as much as in my example, you will still be there in no time.

If the individual has a Roth IRA, then the situation is even more favorable.  With a Roth IRA, the taxes are paid on the deposit amount and are not taxed upon withdrawal at retirement.  So in our example above, the Roth IRA owner would pay taxes on $5000 up front and not on the $2,500,000 withdrawn during retirement.

So if you want to shelter $100,000,000 in an IRA, open a Private Corporation, setup a Roth IRA and give yourself stock options at a seriously reduced price.  Pay taxes on $5000 and enjoy the tax-free high life at retirement.