Some Help From Congress, Some Hindrance from Agencies
Steve Dittmer | AFF Sentinel
Colorado Springs, CO
Originally sent to subscribers 01/24/24
While some issues appear to not be moving much in Washington, like a border bill or a budget for the year that started nearly four months ago, there is progress on some fronts.
Congress and the White House make encouraging murmurs about a border bill but nothing concrete or even text-like has shown up. Meanwhile, the floods of illegals continue and SCOTUS ruled that the Border Patrol can cut the razor wire Texas has put in place to discourage and curtail illegal traffic. But Texas is taking the position the Court did not say they couldn’t replace the wire as fast as the feds cut it, so gritty Texas is doing that. So the farce that is the Biden administrations “control” of the border continues.
Speaker Mike Johnson is under pressure from the White House and from both parties in both Houses but has held his ground that no aid package for other countries will pass while the U.S. border remains open and nearly defenseless.
Meanwhile, Congress has punted once again on government funding, with a Continuing Resolution extending until March. That also means that defense spending at a perilous time for national security has not been bolstered.
The House Ways & Means Committee reported out the Tax Relief for American Families and Workers Act.* The bill was crafted by both House and Senate members and reported out of committee by a huge bipartisan margin. A House floor vote has not yet been scheduled and the bill would go to the Senate if passed. It has things both parties want, fashioning a compromise seldom seen in Washington these days.
The child tax credit provision increases the limits of what parents can claim but also calculates those limits on a per child basis, with some benefits beginning for tax year 2023.
One section of the bill allows expensing of qualifying property rather than using depreciation over time. It increases the maximum amount a taxpayer may expense to $1.29 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. In general, qualifying property is defined as depreciable tangible personal property, off-the shelf computer software and qualified real property that is purchased for use in the active conduct of a trade or business.
As for research and development, taxpayers may deduct domestic research or experimental costs that are paid or incurred in tax years 2021 and before January 1, 2026.
There are also provisions adjusting business interest deductions and bonus depreciation.
The bill would also raise the threshold for reporting 1099s from $600 to $1,000.
Speaking of taxes, politics and actual data, the National Bureau of Economic Research (NBER) issued a report, written by economists from the Universities of Chicago, Princeton, Harvard and the Treasury department
Financial and political commentator Larry Kudlow pointed out that in President Biden’s explanation of Bidenomics and his class warfare campaign, Biden keeps claiming that the "rich" only pay an eight percent tax rate. Kudlow said the problem is that Biden uses a wealth tax, i.e. tax on unrealized income that does not exist, to make his calculations. Biden’s song-and-dance is that under the tax cuts crafted by Congress and the Trump administration, the rich got richer and the poor got poorer. Not so, Kudlow notes.
The NBER report on the Trump tax cuts:
they increased business investment
they increased the average family income by $6,400 (as opposed to the decrease of $4,000 under Biden)
they increased productivity and the increased revenue offset tax rate decreases
after a year or so, government revenue increased
the reduced corporate tax rates resulted in increased wages. Previous research by economist Kevin Hasselt predicted and confirmed this.
The NBER report said the biggest beneficiaries of the tax cuts were middle income families, whose income percentage went up, in addition to an even larger percentage income boost for lower income working families.
All this occurred with an historically low unemployment rate, especially for blacks, Hispanics, Asians and women.
As for continued class warfare, blue state Democrats with high state tax rates are still upset over the cap on state income tax deductions (SALT) in the 2017 tax bill.
All of this contributes to what Kudlow calls the "affordability" problem that voters feel, a main key to Biden's unpopularity.
The effects of real wages increasing seven percent under Trump, while going down four percent under Biden is weighing on most voters’ finances.
It comes back to Reagan’s question of 1980, “Are you better off than you were four years ago?” after four years of Jimmy Carter. Of course, the difference today is that Trump has four years to point to as his proven record, with Biden’s struggles in contrast for the last three.
Federal Government Dewey Cheatum & How Department:
It has been discovered that the federal government artificially boosted the mileage equivalent figures for electric vehicles. Gerri Willis of Fox Business: the reason no one found before now is that the provision was somewhere beyond p.34,000 of Vol. 65. The rule provides that the government will calculate mileage equivalents for electric vehicles by multiplying their actual mileage by 6.67. So, an electric vehicle that actually gets the equivalent of 65 mpg will show as 430 miles in government figures and the latter is what government subsidy calculations -- paid for by the taxpayer -- are based on.
Next time: While packers fight for market share, cattle to process and the Biden administration tries to boost packing capacity, the EPA sets out to put more burdens on packers and put small ones out of business.
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