Category: Economy
$15 Minimum Wage Would Boost 17 Million Workers, Cut 1.3 Million Jobs, CBO Says

$15 Minimum Wage Would Boost 17 Million Workers, Cut 1.3 Million Jobs, CBO Says

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The Congressional Budget Office analyzed the impact of lifting the $7.25 federal minimum wage to $15 by 2025. The House is expected to vote next week on a bill to lift the federal minimum.

Raising the federal minimum wage to $15 an hour by 2025 would increase the pay of at least 17 million people and lift 1.3 million Americans out of poverty, but also put 1.3 million (and up to 3.7 million) Americans out of work, according to a study by the Congressional Budget Office.

The CBO predicted much bigger job losses than House Democrats, who have pushed for the $15 minimum wage, expected.

So let me get this straight, the higher minimum wage was expected to lift 1.3M Americans out of poverty but plunge 1.3M (and up to 3.7M) Americans into poverty. Wow! Maybe we should just keep the federal government out of our lives and tell them to keep arguing between themselves while we live our lives in peace and raise our children.

As Mr. Reagan once said, “The most terrifying words in the English language are: I’m from the government and I’m here to help.”

Source: $15 Minimum Wage Would Boost 17 Million Workers, Cut 1.3 Million Jobs, CBO Says
The Paris Climate Fraud

The Paris Climate Fraud

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The world signed on to a really bad agreement in Paris and the US mistakenly agreed to part of the charade so that the politicians could feel better.

I am not a Trump supporter, but it was wise for him to reverse the foolish commitment made by Mr. Obama.

https://www.facebook.com/JohnStossel/videos/10155988767501621/
Soon Your Phone Will Be Your Driver’s License, MetroCard and More

Soon Your Phone Will Be Your Driver’s License, MetroCard and More

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While digital versions of our credit and debit cards aren’t widely accepted just yet, it’s a given that in the future, the majority of the places where we shop will accept Apple Pay, Google Pay and the like. I look forward to the day when I can increase my personal security and reduce my pocket bloat by only carrying a small computer (my phone) to identify me and conduct my transactions.

From government IDs to hotel keys, the rest of our cards are quickly moving to mobile phones. As this becomes more ubiquitous, it will be harder and harder to justify carrying unique pieces of plastic in your wallet.

I look forward to this image being everywhere!

 

Great reading on this topic: Soon Your Phone Will Be Your Driver’s License, MetroCard and More – WSJ

Many Politicians Are Two-Faced When It Comes To Tariffs

Many Politicians Are Two-Faced When It Comes To Tariffs

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As I write this, POTUS Donald Trump is pledging to begin tariffs on Mexico for its accused lack of assistance in the immigration crisis on the southern border of the US. Here is a quick news account from Politico:

The White House pledged on Thursday to charge ahead on tariffs on Mexico, saying the U.S. position “has not changed” after officials met for a second day to address the steady flow of Central American migrants trying to enter the United States.

Talks between Mexican and U.S. officials at the White House wrapped up without resolution. Several key officials in the administration were unavailable for negotiations. President Donald Trump was in France for the 75th anniversary of the D-Day invasion, and both Vice President Mike Pence and Secretary of State Mike Pompeo were on the road.

Just about every politician is talking out of both sides of their mouth on this issue. This includes a good portion of the Republicans (especially Mr. Trump) and nearly ever Democrat that I can think of.

To be crystal clear, I despise the use of tariffs against another country. I don’t like taxes in general and using taxes as weapon (i.e. tariffs) is simply a bad practice.

Tariffs are taxes. Plain and simple. They are taxes on corporations that import from the punished country, which in this case is Mexico.

The problem with tariffs and corporate taxes is that corporations never pay taxes. They incur costs. They pass those taxes as costs on to their customers in the form of higher prices for the product. They think of taxes as the same as wages, costs of materials, rent on their buildings, etc. It is a separate line item on their financial sheet, but it is deducted from their income the same way when calculating earnings.

It isn’t the corporation that pays the taxes, it is the consumer. Worse, the tax is regressive in that it is applied to all consumers of the product regardless of their ability to afford to pay or their income. Nearly everyone agrees that regressive taxes that take a larger percentage of poor people’s income than the percentage of wealthy people is unfair. But corporate taxes and tariffs are exactly that – a regressive tax on poor people.

Trump and most Republicans want lower corporate taxes. This, in general, is a good thing because as I said above, corporations don’t pay taxes – they only incur costs that are passed to their consumers. Corporate taxes are an evil and regressive tax against consumers.

So it is illegitimate for Trump and these anti-corporate tax Republicans to support the tariff on Mexico (and probably on China, but China is a different problem).

Democrat readers shouldn’t get too excited about the above paragraph, as they are actually worse.

Most of the leaders of the Democrat party are in favor of raising corporate taxes. This is a terrible stance since, as I stated above, corporate taxes are simply a regressive tax against the poor. The Democrats are supposed to be the party of the poor worker and yet they support regressively taxing those people. That is incredibly evil and insincere. They only do it because it plays well in political speeches. Democrats don’t really want to help poor people, they just want to be re-elected (which is also the goal of Republicans). They are willing to be for a tax that hurts their constituents rather than be truthful and lead those constituents. This is unbelievably cruel and ruthless.

But then Democrats become even more two-faced. Because they hate Trump so much they oppose the Mexican tariff. This is ridiculous if they were ideologically pure since tariffs (while very bad IMO) are simply what most Democrats espouse – higher corporate taxes.

So what does all of that mean?

Unfortunately, it is simple. Both parties are mostly evil and don’t want to help Americans. They are willing to lie and mislead their constituents simply to retain their individual jobs. The only valid option as voters is to THROW THE BUMS OUT! EVERY LAST SITTING FEDERAL POLITICIAN NEEDS TO LOSE THEIR JOB IN THEIR NEXT ELECTION!

High Interest Rates Are Hobbling Growth – WSJ

High Interest Rates Are Hobbling Growth – WSJ

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The problem with growth in the US economy will be immediately be solved the day that we stop the trade war with China. We don’t need the Fed to counter-balance a political battle between China and the US. Mark my words, when this trade war is over, the economy will almost immediately overheat.

Also, you can guarantee that POTUS will turn off the trade war by the first quarter of 2020 so that the economy is running at top speed for the November election. The Chinese know this and they know they just have to hold on 6 more months and our political will for the trade war will vanish.

Source: High Interest Rates Are Hobbling Growth – WSJ

There’s an increasingly strong case that the Federal Reserve should cut interest rates to weaken the U.S. dollar and encourage greater exports—and that it should do it soon.

A strong dollar makes it cheaper for Americans to purchase foreign goods and more expensive for those using a foreign currency to purchase American goods. The dollar has strengthened relative to foreign currencies since the second quarter of 2018, and U.S. exports have essentially stagnated. While the U.S. economy surged in 2018 thanks to tax cuts, deregulation and a declining oil price, gross domestic product could have grown faster. Preliminary GDP growth over the past three quarters has been a strong 2.9%, but had real exports grown at a 3% annualized rate—which they did from 2009 to 2018—GDP would have grown by 3.2%.

The Fed’s tightening of the money supply contributed to this decline in export growth by making the U.S. dollar more valuable. The Fed has increased the federal-funds rate nine times since beginning the rate increases at the end of 2015, which boosted the demand for greenbacks. The greater the federal-funds rate, the greater the return on investments made in dollars. The Fed also ended its expansive monetary policy as the economy improved, constraining the money supply and further enhancing the dollar’s value.
A tax plan that would promote economic growth

A tax plan that would promote economic growth

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Both halves of Congress are trying to create a more fair tax plan that will promote growth and simplify the code. I am skeptical that anything will get done though as it appears that this Congress is incapable of doing anything significant.

Since Congress will almost certainly fail, I thought I would put my suggestion on the table. As I analyze it, it is probably the most likely plan that I have ever seen to encourage employment growth.

The first step is to not change anything for individuals except to increase the amount of money saved in long-term savings without tax penalty. This should be doubled from its present rate. The government is in the retirement business, and it isn’t doing a sufficient job of managing it. The government needs to get out of the retirement business because the government can rarely do something well. Social Security is a broken plan, and we all know it – we just need to transition out of the retirement business slowly so that we do not screw up the American workers that depend on Social Security.

Currently, the government taxes employees directly via the FICA tax on each dollar earned. The government increases this tax by assessing the employer an equal amount. This direct tax exceeds 15% and is used to fund Social Security. While it is essential to finance Social Security for today’s seniors, we need to get away from this transfer of cash from working Americans to retired Americans. We need to make it financially affordable for working Americans to save for retirement so that they can live off of their own money and not their children’s and grandchildren’s money. The fact that Social Security will be insolvent between 2025 and 2034 (depending on analyst assumptions) points to the fact that the system is systematically flawed. I have ranted on this in the past.

The biggest change in the tax plan is to change the way we tax our employers. Not just big companies but every employer – be they big or small. We need to reward companies for investing in their business and investing in their employees.

Currently, the corporate tax rate is around 35%. This tax burden is massive. Unfortunately, it is unevenly allocated and most directly hurts companies based in the US, primarily employs US workers, and principally sells to US customers. This is preposterous! Why is the federal government trying to hurt the best companies, but reward those companies that have substantial foreign investments?

My suggestion is to eliminate all tax loopholes in the corporate plan except for the ones that I itemize here. Yes, that means that Congress will never go along with me since every special interest lobbyist will argue and bribe vehemently to fight my simple and easy ideas. Here are the highlights of the plan:

  • Corporate income tax is 35% for all income.
  • Income taxed in a foreign country returned to the US corporate parent is the difference between the original tax paid and 35%. This balance of tax is still available for the following discounts (as well as all US based income).
  • For every dollar that is paid to train employees plus one additional dollar, there is no US corporate tax. Corporations should be encouraged to train their employees so that money shouldn’t be taxed and additionally they should be rewarded by claiming 200% of that investment up to 35% of corporate income. This reduction in taxes is good for the company, great for the employees, and magnificent for the US economy. In the 21st century, only smart workers are valuable, and we need to increase that pool of people.
  • Today, wages and benefits to employees are already written off and not counted toward income. This expense will remain the same (as with all business expenses) however if the employer hires more workers in the US and its territories from the previous year then the company should be rewarded. The company will be able to write off that new employee’s wages plus an additional 300% up to 35% of corporate income. Please note that this is ONLY for the growth of full-time employees from the previous year to the current year. The employer doesn’t get to deduct this cost for perpetuity but only for the first year. Also, note that this doesn’t allow the employer to increase foreign-based workers, the workers have to be reporting to work in the US and its territories.
  • Any improvements in facilities are already written off, and that will continue. However, this will be accelerated in my plan as the company can write off 200% of all INCREASES in facilities, marketing costs, sales costs, etc. as long as they are spent in the US and up to the 35% cap that already exists. They will be able to write this off in the year that the expense occurs. Note that this is only for increases in those costs over the previous year. If the company doesn’t grow those costs, then it is simply held at the standard 35% deduction, but if the company increases those investments in US-based assets, then the company can accelerate those year-over-year savings.

So how is this good for the US economy and the US worker? Simple, it is all about the economic growth, the growth of employment, and improving the lives of US workers. Companies that are unable to grow their business will not get this benefit, but companies that can employ more US-based people, create more US assets, and improve their ability to market to US-based customers will thrive. It puts America first in our corporate tax policy. It rewards companies that invest in America and it doesn’t help any company that chooses to invest internationally at the expense of America.

This plan will accelerate the return of money from foreign lands back to the US. This plan will encourage companies to hire more US-based workers and will significantly increase the quality of life of Americans.

This isn’t a giveaway to the corporations or a supply-side “hope for the trickle-down plan.” It only rewards companies that truly make the trickle-down (in the form of a gusher rather than a trickle) happen. No company will be able to take advantage of this plan unless they truly change that “trickle” to a firehose of economic prosperity.

This plan will never pass. Too many lobbyists will be hurt. Too many special interest groups will not have their interest served. However, this is one plan that would almost guarantee massive prosperity for the American middle class and therefore massively increased tax revenue for the Federal government.

It just makes sense which is why it will never be adopted by Congress. Simple things that make sense never seem to get done by Washington DC.

Photo by 401(K) 2013

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