Tax Strategies

Confusing Candidates

The news has been full of economic policy proposals from our two major candidates.  I’ll tell you that I’ve been reading them with interest, but cannot make sense out of either of them. 

They are both promising big economic windfalls to their favored protected classes and paying very little attention to the country’s current $35T debt (123% of GDP, up from just 56% in 2000).

Here’s what I’ve heard so far …

(Much of this analysis from Committee for a Responsible Federal Budget)

Trump would continue the 2017 Tax Cuts & Jobs Act (TCJA) and eliminate taxes on Social Security & tip income.  I’ve seen those promises valued at about $4T over a decade – $400B annually.  If that’s not enough, he is now vaguely saying at rallies that he will also offer “a Trump middle class, lower class, business class, big tax cut.” No details, but he claims “You’re gonna have the biggest tax cut.”  

At the same time he wants to cut taxes, he conversely wants to raise tariffs on all imports by 10%.  Sometimes he says even 20%.  I know that imports are only about 15% of the economy (GDP), but that’s still a very big increase (maybe $400B-$1T). 

Kamala Harris is no better.  Her economic proposals are equally confusing and counter each other.  She says she wants to raise taxes on the wealthy & corporations by allowing the 2017 Tax Cuts & Jobs Act to sunset, restoring the State & Local Tax (SALT) deduction.  I’ve seen it estimated that this could increase federal revenue by $1.9T over a decade – about $190M per year. 

She is also supporting a doubling of the capital gains tax – including – “unrealized capital gains”. No details on what that would cost taxpayers, but certainly hundreds of billions per year.

At the same time, she is promising to support aggressive new spending – some which are already in the TCJA.  Her big focus is on increasing the TCJA’s Child Tax Credit and lowering taxes for middle class families.  She also wants to fund incentives for first-time homebuyers and continue the Biden focus on cancelling student loans.  I’ve seen this estimated at about $2T over 10 years – $200B per year.

That could be small potatoes to what she hasn’t shared. She hasn’t shared her spending priorities on green energy, national health care, education, or climate change, but her 2020 campaign promises added up to over $4T – higher than any other 2020 candidate.

In conclusion, I would just say that none of this adds up.   Neither candidate has put forth a clear or compelling vision of spending & taxation for the nation.  Neither seeks to address the national debt (or unfunded Social Security & Medicare liabilities).  They seem to just be throwing promises of big money to their favorite groups to garner votes.

Both will continue Washington DC’s fiscal madness.  Once in office they will likely get busy trying to buy the next election. Rinse & repeat.

If you are approaching retirement in the next year or trying to plan your future, good luck! When candidates start throwing around trillions in spending and tax changes around with no concern for our debt, things could get out of hand quickly. The NY Federal Reserve currently says we have a high probability (~55%) of a recession in the next 12 months. It hasn’t been that high since the early 1980s.

Please correct me if you are hearing anything different or if you think one of these two clowns actually has a well thought-out approach to our nation’s fiscal woes.  All I can hope for at this point is legislative gridlock that will prevent either of these candidates from making any economic impact. 

Image: MPR

20 thoughts on “Confusing Candidates”

  1. Thanks for sharing the link to Committee for Responsible Federal Budget (CRFB). I explored the site and was especially intrigued by their interactive tool on solving Social Security.

    https://www.crfb.org/socialsecurityreformer/

    The tool illustrates that small adjustments done now can possibly avert larger, more painful adjustments later. It just seems that Washington is incapable or unwilling to compromise to implement these solutions.

    Liked by 2 people

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    1. Yes – I’ve played with that tool a bit, too. Perhaps we should send a link to our Congresspeople in Washington DC to get them started?! 😉

      Liked by 1 person

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    2. I played with the model and saw it lacked the ability to cut the Federal Budget in other areas to offset the shortages. How about tackling disability and Medicare fraud and inflation as starters?

      One other observation is that it cuts the payouts to the top of the scale beneficiaries first. If you look at the income bend points used to determine Social Security benefits, you will see that those who have paid in the maximum amount are receiving a smaller return on their ‘contributions’ to Social Security than those who are receiving the minimum amount. Once again this is an attempt to villainize ‘the rich’ who are paying the most taxes already.

      Here is a summary of the bend points which are based on Average Indexed Monthly Earnings taken over your highest 35 years. $0 to $1,115 pays out at a 90% rate. The next $1,116 to $6,721 band pays out at a 32% rate. $6,722 and up pays out at a 15% rate.

      Expanding the program to provide a minimum benefit to those who have not worked and contributed very much is the root cause of the shortage.

      https://www.fool.com/retirement/social-security/bend-points/

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    1. Agree – I’m a long time Ron Paul libertarian. I voted for him 40 years ago when he led the LP ticket. It might take until we are in an Argentina-sized catastrophe for people to wake up and stop the madness with a Javier Milei style President. Let’s hope it will happen sooner.

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      1. My oldest son was a leftist after graduating from public high school. Ron Paul caught his attention and righted his course.

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      1. There is one major bad policy idea that Kamala is throwing out there right now. Namely charging capital gains taxes on unrealized capital gains on anyone with over $100 Million.

        This bad policy is being sold as making ‘the rich’ pay their fair share. Those who do not consider themselves rich fail to recognize that inflation given time will ensnare many in this new tax trap. It would also be devastating to US Capital formation and could potentially put the WEF’s Klaus Schwab’s (you will own nothing and be happy” in play”.

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      2. I don’t even want to think about the craziness of unrealized capital gains taxation. It makes the future composition of the Supreme Court very important.

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  5. My wife and I just watched the excellent Reagan Movie yesterday. The problem was that as a country we were too focused on only external threats, while Communists infiltrated many organizations such as Scouting, government, church denominations, education, media and even board rooms. If the Demonrats win both Houses and the Presidency they will pack the Supreme Court and make voting citizens out of the millions of illegal immigrants they have allowed to invade our country,

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    1. I heard the movie got good initial reviews. I’d like to see it. I guess Dennis Quaid won’t get invited to Hollywood parties anymore!

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      1. Dennis Quaid really sounded a lot like Reagan. The other thing that was great about the movie is it portrayed the Reagans as having a strong marriage. I think that helped him get to where he was.

        The core actors were a group of Conservatives who are working regularly, with Kevin Sorbo, John Voight and Robert Davi. I think they are all treating these movies as a start-up effort and they are growing an audience. For example Kevin Sorbo was also recently in “The Firing Squad”. Angel Studios, which really got their start with “The Chosen” really racked in the money releasing “The Sound of Freedom”.

        My wife and I have actually been to a lot of movies since the 4th of July including Arthur the King, Horizon, Thelma, Twisters, My Penguin Friend and Reagan. Horizon was the only movie we didn’t really like. The script wasn’t right. Thelma had Richard Roundtree in his last film and I couldn’t stop humming the Theme Song to Shaft in my head. We missed “The Firing Squad” and plan to stream it as soon as its available.

        I saw Ronald and Nancy Reagan attending church until he became very ill with his Alzheimer disease. It really angers me when I see the lying legacy media as portraying him as not being religious and going to church. I certainly saw him sitting in church.

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      2. My wife just watched the King Arthur/Dog movie on the plane. She really liked it. We saw Twisters, too – I liked it enough to go back and watch the original (which wasn’t as good).

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      3. If your wife liked Arthur the King, she will also like My Friend the Penguin. My Friend the Penguin is another animal story based on real-life.

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