When Tax Reform Hurts

GOP Tax Reform Helps the Wealthy

Not the Rest of US

The tax reform bill that squeaked through the House of Representatives this week drastically cuts taxes for the very wealthy and will add $1.5 Trillion to the federal debt over the next decade.  Those of us who work for a living did not fare so well.

People who use deductions and credits for housing state and local taxes, medical expenses and education costs will probably end up paying more in federal income taxes under the current plan.

Using old and unproven arguments, the GOP leadership cut the corporate tax rate on profits from 35% to 20%. Claims that this will lead to more jobs and higher wages do not hold water. What the corporate tax rate cut is much more likely to generate are increased dividends to stockholders and increased executive pay. Interestingly, about $70 billion a year, 35% of the benefits will flow directly to foreign investors who own shares in American companies, according to the Urban-Brookings Tax Policy Center.

Real estate partnerships, hedge funds and other business that pass profits through directly to owners untaxed will see significant benefits under the new bill. The GOP leadership wants those owners to pay just 25% on those profits instead of the ordinary income tax rates that go up to 39.6%. The Trump family is a prime example of the type of business owner invested in real estate that will see enormous tax cuts with this new benefit.

The secret backroom negotiations that led to the new code revisions hit middle-class families, especially those in high tax states, the hardest with the elimination of deductions for state and local income taxes, limiting the real estate property tax deduction to $10,000, capping the mortgage interest deduction at $500,000, elimination of deductions for medical expenses, college tuition and interest on student loans.

There are still more Trump family benefitting changes as well. The bill eliminates the alternative minimum tax now paid by wealthy people with lots of deductions. Trump’s leaked tax returns for 2005 show the vast majority of the taxes he paid in that year were based upon the alternative minimum tax. Of course, he has not revealed any of his other income tax returns so we can only speculate on the impact the new code provisions will have on his current business income stream based upon know investments. The other major benefit to Trump and his children is found in changes to the federal estate tax. That tax currently applies to inherited wealth over $5.5 million. The new bills exempt inherited wealth up to $11 million next year and phases out the tax completely by 2024. That single change will benefit just 0.2 percent of the people who die every year, but will cost the government $269 billion over a decade.

House Speaker Paul Ryan (R-WI) claims that a middle-class family of four earning $59,000 per year will see tax savings of $1,182 per year under the new plan. Tax experts at New Your University Law School sees the claim as illusory because the cut will evaporate over a decade as several tax credits in the plan expire and inflation indexing changes take place. It is estimated that Ryan’s hypothetical family will see a tax increase by 2024. If the bill simply cut income or payroll taxes for middle class workers and doubled the standard deduction for individuals and married couples, it would be easy for the GOP to make their case for middle class tax relief. They rejected that simple approach.

Another current middle class tax benefit will vanish. Now, parents can claim personal exemptions for themselves, their spouses and dependent children. The new bill eliminates these exemptions in favor of a $300 personal credit for each parent. Even that expires in five years. For larger families, this clearly increases their federal income taxes.

The elimination of the medical expense deduction hits those with chronic illnesses and lousy medical insurance incredibly hard. If you have or make lots of money and can pay out-of pocket medical costs, you win. If you cannot, more of your paycheck vanishes to pay the doctor.

New polling on public reaction to the new plan shows that it is in trouble. A survey by Global Strategy Group in key states show that sixty percent believe the plan favors the wealthy over the middle class. Twenty percent believed they would personally see a benefit. Those responding to the survey voted for Trump by a 13-point margin.

Republicans in key states with high state and local taxes are on the fence as are those aligned with the construction industry that views mortgage interest rate deductions and property tax credits as keys to home ownership. If more Americans see the bill as a gift to those who do not need it and little to no benefit to those that do, it should fail.

Waring R. Fincke is a retired attorney and serves as a guardian for the elderly and disabled.

We Need Bi-partisan Solutions

What’s wrong with bi-partisan solutions?

Compromise produces solutions.

Ever since Newt Gingrich instituted the current GOP “take no prisoners” political strategy, bi-partisan solutions to the nation’s problems have gone nowhere.

Healthcare is the latest victim.

After the Senate failed in several attempts to repeal and replace Obamacare, President Trump issued an executive order purporting to end the subsidies paid to insurance companies that enabled lower premiums for coverage. The resulting outcry was swift and merciless.

Without the subsidies to make premiums affordable for millions of middle class folks, many would have to go without coverage. It turned out that as many as 70 percent of those receiving the subsidized premiums live in states that voted for Trump. Betrayal is a brutal political move.

Part of Trump’s message when he issued his order was that it was up to Congress to fix the problem. Congress is stuck. Not enough republicans can come to agreement on a fix. Ultra conservatives are still holding out for Obamacare repeal. GOP moderates are willing to look reality in the eye and reach across the aisle for help. Many democrats are stuck on a single payer, Medicare for All, plan and oppose anything less. Some are willing to cross the aisle to forge a short-term solution that at least maintains the status quo until a more comprehensive fix can be forged.

Enter Senators Patty Murray (D-WA) and Lamar Alexander (R-TN) who put together a short term fix that would extend the premium subsidies for two years to keep people insured until a better plan can be enacted. It was a truly bi-partisan effort and gained co-sponsors from both parties, including one of our own Senators, Tammy Baldwin.

Trump initially supported the idea in phone calls with Sen. Alexander and public comments on Twitter, his favorite platform, and elsewhere. After pushback from those in the ultra-right like Sen. Ted Cruz (R-TX) and others, Trump appeared to switch course, claiming he could never support bailing out insurers.

It remains to be seen if the Murray-Alexander bill will command enough support to get out of the Senate and over to the House for a vote where it will have a much tougher row to hoe for passage. It does represent, at least, a ray of hope that bi-partisan solutions can still be found.

Our government works best when the people we elect to represent us are willing to compromise. We have a lot more in common and than our leaders think and are willing to recognize. Ideological purity is the single biggest impediment to progress and the ability to find solutions to common problems.

No single bloc in the American body politic commands a sufficient majority to exert total control over the reigns of government. Even with simple voting majorities in both houses of congress and a president of the same political party, republicans cannot command enough votes to advance an effective agenda. There is too much of a spread in the spectrum of the conservative right to get it done. Even with extreme gerrymandered congressional districts to support continued GOP rule, the spectrum spread will prevent a totally unified response to the issues we face.

It is time to put aside the labels of conservative, liberal, republican and democrat and to ask candidates who want to represent us in the halls of government how they plan to govern. Are you going to hew the party line or listen to all the voices? Are you going to seek real solutions to our common problems or let your personal preferences govern your decisions? Are you willing to work with all of your colleagues or just those in your party?

Our new era needs leaders committed to public service, not personal aggrandizement. They need to listen to the diverse voices of the nation, not just their isolated constituents. The need to work to see   the pressing issues of our time, not merely to align them with their own world view, but in a way that allows for input from all points of view to find a workable solution.

It is easy to stake out a position and claim its validity to the world. It is much harder to consistently re-examine that position in light of new facts or arguments and to be able to admit you were wrong and change your mind. We deserve leaders and representatives who are up to that challenge and willing to embrace it wholeheartedly.

Waring R. Fincke is a retired attorney and serves as a guardian for the elderly and disabled.

Graham-Cassidy will Kill People

Trumpcare 3.0 will kill people

Single-payer deserves consideration

Just when you thought that the health insurance you could finally afford under the Affordable Care Act was finally safe, two heartless and downright cruel Senators bring up one last repeal and replace bill with the sole justification being, “that’s what we campaigned on.”

The latest edition of Trumpcare 3.0 is decidedly worse than any of its predecessors when measured by the damage done to the 25-35 million people stripped of health insurance, those stripped of basic healthcare all together and the families who will have to pick up the care costs for their young, disabled or elderly parents. All this on top of further restrictions on reproductive healthcare and reductions in other healthcare programs for women

The Graham-Cassidy healthcare bill is being ramrodded through the Senate by Majority Leader Mitch McConnell who will stop at nothing to undo everything the Black former president put together. They need to get it done before the end of next week when the Senate rules revert back to a 60 “yes” vote requirement for any bill to pass.

Putting the bill together behind closed doors with no public, much less Democratic, input or review, it is being cast as a choice between states rights and the dreaded socialism of the government run single-payer Medicare for All healthcare system gaining increased public support daily. It is being rushed to a vote, before the Congressional Budget office can complete its review and provide the impartial numbers on the damage it will do and the costs involved. It is a true pig in a poke.

What we know is that Graham-Cassidy will roll back Medicaid expansion that gave 14 million Americans health insurance coverage for the first time. The rest of Medicaid, care for the elderly in nursing homes, the disabled, young people in poverty and others, will also be trimmed and converted into lump sum payments to the states with insignificant controls on how each spends the funds allotted creating 50 different healthcare systems for the sickest and most vulnerable. The savings will go to fund GOP tax cuts for the wealthiest and corporations who need them the least.

With insurers being allowed to charge sick people more, health insurance premiums for those still covered will skyrocket. With the elimination of required coverage for pre-existing conditions, the cost of insurance will quickly rise to levels that most Americans cannot afford. One analysis puts surcharges, in addition to the regular premiums, for opioid addicts and those with rheumatoid arthritis at $20,000, $50,000 more for those with serious heart conditions, and over $140,000 for those with metastatic cancer. Another puts a $4500 surcharge on asthmatics, $17,300 on pregnancy and a $72,000 bump on lung cancer.

The state block grants would punish the Democratic states that took Medicaid expansion dollars and reward the GOP states that did not. States receiving the grants will be allowed to apply for waivers from many of the Affordable Care Act requirements that the bill does not repeal directly. If you need a service not covered, you will have to pay for it. ACA premium subsidies will be phased out by 2020. The slow death of federal healthcare funding will continue to 2027 when all federal dollars for the nation’s health will cease.

The deadlines for figuring out your insurance for next year loom. Insurers must sign final contracts for 2018 by the end of next week. If ACA subsidies vanish next year, premiums will explode.  ACA enrollment starts November 1^st. The new bill will eliminate the requirement for everyone to have insurance or pay a penalty. With that gone, many believing themselves to be healthy might not buy insurance at all. That too will drive up premiums as insurers scramble to cover a larger pool of sick people with fewer premium dollars.

Even with the developmental secrecy, negative reaction to the latest

Trumpcare has been swift and severe. Governors from both parties have condemned the bill. The American Medical Association, AARP, the America Hospital Association, most of the major disability advocacy groups, and representatives from just about every significant healthcare organization have urged Congress to reject the bill. Health insurers oppose it too. All 50 of the state Medicare directors oppose it too.

The three holdout GOP Senators’ objections to Trumpcare 1.0 and 2.0 have not been addressed in the new legislation. Hopefully, they will continue to stand up for their constituents like all of the Democrats in the Senate who will vote “no.”

This bill must fail, paving the way for serious consideration of a universal single payer system similar to those used for decades by most of the countries on the rest of the planet. It is time to stop the madness spawned by hatred of all things Obama and for bi-partisan solutions for America’s health.

Waring R. Fincke is a retired attorney and serves as a guardian for the disabled and the elderly.

Foxconn is a con.

Foxconn is a Con

It must not pass

Praise was almost due to a few remaining sane GOP Wisconsin Senators who refuse to get sucked into the latest Scott Walker/Robin Vos con job. Senate Majority Leader Scott Fitzgerald recently told the Governor that the Senate republicans may not have enough votes to pass the Assembly bill approving Walker’s deal with technology giant Foxconn. Fitzgerald and some of his colleagues appeared concerned that the Foxconn con is truly a bad deal for Wisconsin taxpayers and our environment. Fitzgerald soon retreated to safe GOP ground, introducing the bill in the Senate and sending it to the Joint Finance Committee.

It should have been easy to heed the non-partisan Legislative Fiscal Bureau’s numbers showing that a child starting first grade now will be suffering from the tax payments to Foxconn until they are well into their thirties before Wisconsin starts to see a financial break-even point in 2043.

When Republicans tell us they cannot pass the current state budget because they cannot find the money to pay for transportation and education commitments, where do you think they will find an extra $250 million plus per year for the next 25 years to give to Foxconn? They will either have to raise taxes or make further cuts to already strained transportation and education funding. Not a good choice for the “no new taxes” crowd faced with mounting pressure to fund roads and public schools.

Sen. Fitzgerald was also initially concerned with the lightening speed with which Walker and Vos, backed by President Trump who put no federal dollars into the deal, got the Assembly to move on this latest bait and switch con. Only one official public hearing monopolized by invited guests who support the deal before the bill gets a vote next Tuesday is a new low point in the current GOP dominated public discourse. Now Fitzgerald appears on board with speedy passage as well.

Critics from the business community, led by Bloomberg, tell us that this is a truly terrible deal. $3 billion for 13,000 new jobs, many of which will go to folks from Illinois who live close to the border, amounts to a $1200 per Wisconsin family tax payment each year for a good portion of their working lives. When coupled with the $50 million in lost sales tax revenues each year from additional Foxconn tax incentives, the GOP senators with sense should pause to jump on this train.

Even pro-business, anti-government regulation members of the GOP Senate should balk at the wholesale abrogation of state environmental protections in Foxconn’s Walker/Vos proposed new technology district. If the package is passed, Foxconn will alter the course of rivers and streams, fill wetlands with dredged material and divert significant amounts of water from Lake Michigan, all without DNR oversight or burdensome state regulatory filings. The DNR has already hired a project manager to show Foxconn how to avoid environmental laws. Have no doubt, there is going to be little federal oversight either from the newly gutted Trump/Pruitt led Environmental Protection Agency. Wisconsin residents will suffer from Foxconn’s environmental damage long after the sting from their increased tax burdens and spending cuts has vanished.

These objections to the con that is Foxconn should be sufficient to scuttle the deal, but there is more. Topping the list is Foxconn’s history of failed promises to deliver economic prosperity with new facilities. The tech giant failed to follow through on a deal with Pennsylvania to build a new facility there. It has not delivered promised economic benefits in deals in Vietnam, Indonesia, Brazil and India. Next, consider Foxconn’s failure to protect workers in its existing factories from long hours, unsafe working conditions and abusive labor policies. Its leaders have compared their employees to animals and imposed animal behavior modification techniques for control. Hardly a Wisconsin model employer. Fitzgerald complained there is no timeline for the promised job creation in the plan, but backed away from this limited concern for jobs.

Other concerns should give legislators pause. The plan is to give the job of negotiating and then policing Foxconn’s economic promises to Wisconsin’s troubled Wisconsin Economic Development Corporation (WDEC). You will remember WDEC’s stellar record with shady loans and incentives to businesses that promised to create jobs that never materialized and its subsequent multiple failures to recoup taxpayer money spent to incentivize the failures. It is no surprise that many of those failures were with folks who made substantial campaign contributions to Walker and the GOP.

Gov. Walker is gearing up to run for another term in 2018 and desperately needs an economic victory to distract from his past failed job promises and inability to shepherd a budget through a legislature with solid republican majorities. Here’s hoping there is enough sanity in the GOP Senate ranks to stop this boondoggle in its tracks, even if it costs Walker his re-election bid.

Waring R. Fincke is a retired lawyer and serves as a guardian for the elderly and disabled.

Just Saying No Isn't Governing

Just Saying “No” Is Not Governing

Compromise Works

Republican legislators, state and federal, are slowly learning that actual governing requires more than just saying “no” to new taxes, kowtowing to wealthy donors and sticking to talking points crafted by those whose agenda is to advance their own personal agendas and dismantle the government.

On the federal level, even with control of both houses of congress, allies in the Oval Office and a majority on the Supreme Court, the GOP cannot pass its signature piece of legislation repealing and replacing the dreaded Obamacare.

The House of Representatives’ version pushed and praised by Speaker Paul Ryan was homage to his mentor and philosophical guru, Ayn Rand. Their vision of healthcare insurance coverage is to take it away from over 22 million Americans, dismantle and underfund what might be left of Medicaid, and provide enormous tax breaks to the wealthy and health insurance companies already reaping substantial profits on the misery of the ill. Their mantra appears to be, “I’ve got mine. If you cannot afford it, you cannot have it and clearly do not deserve to have it.”

The initial version from the U. S. Senate was not much better. 22 million would still lose coverage and Medicaid remained on the chopping block. Senate Majority Leader Mitch McConnell could not corral 51 votes from his fellow republicans for his bill, even after arm-twisting from the White House and closed door deals with hold out senators.

The next version was released on Thursday with small tweaks to try to win over skeptics in the GOP ranks. There were some improvements, but the basic flaws remain. Here are the low points.

Medicaid payments would be fixed per-person amounts to the states that are guaranteed not to keep up with rising healthcare costs. These cuts will hurt the young and elderly disproportionally, especially when joined with the rollback of Medicaid expansions.

Insurance plans would no longer have to meet minimum coverage benefit standards. Sicker people would be forced into higher benefit plans, driving up the costs which would lead to higher premiums, co-pays and deductibles. This will drive up premiums. The fund created to help high premium costs is wholly insufficient.

Tax credits and health savings accounts for catastrophic health insurance plans are useless to low-income folks who lack disposable income to utilize them.

Also still gone will be the requirement for all to carry health insurance. With the young and healthy out of the pool, premiums for the remaining older and sicker will skyrocket.

McConnell’s move to keep the Obamacare taxes on the wealthy is a sly move to win senate votes, but is merely sleight of hand to cover a later, larger tax cut for the rich under the budget reconciliation rule that will only require 51 votes to pass.

Public pushback from all sectors has been substantial and will continue making it hard for some GOP senators and representatives to support the Senate bill in its current form. Without a large measure of compromise to win over enough Democratic votes, Obamacare will remain the law of the land until driven to ruin by GOP sabotage.

In Wisconsin, we are not much better off. Even with control of both houses of the legislature, the governor’s office and the Supreme Court, we cannot pass a state budget for the next two years. The state’s budget was supposed to be passed by July 1^st. We did not run out of money or close up shop like some other states without passed budgets, but we remain stalled nonetheless.

A majority of us want to put money back into public education that previous budgets stripped away. We also want decent highways and roads upon which to travel. Because our legislators are still stuck on “no new taxes,” we do not know how much state aid will flow to our public schools leaving local budgets in limbo. Similarly, we have highway construction projects around the state in limbo and no idea what may be available to fix local roads in our cities and towns. School funding appears to be contingent upon road funding.

Many conservatives no longer buy into increased borrowing to fund road construction and repair. They recognize the need for increased revenue to fix the problem.

One solution, a non-starter for the leadership, would be to increase the gas tax by five cents a gallon. The gas tax used to be indexed to inflation, but that died under GOP control so we are stuck with a 2006 tax level. Cars and truck are more fuel efficient, so we buy less gas. Gas tax revenues are down as a result.

Not finding a solution to road funding jeopardizes education funding and local budgeting. A three-month budget delay will keep the DOT from proceeding with some planned projects. A four-month delay will impact local road budgeting and a delay until August could mean loss of federal highway funds.

Maybe it is time to sit down with Democrats and find solutions that will command the votes to govern, as our government requires.

Waring Fincke is a retired attorney and serves as a guardian for the elderly and disabled.