Free Money?

 

  “The $1.9 trillion COVID relief bill has been called the most significant expansion of the welfare state since the Great Society,”  Western Journal. And, they note the 628 pages include a new “Tax the rich!” provisions.  It had 628 pages of new “tax the rich” and accolades to AOC style “We’re all gonna die! (gasp)” warnings.

$60 billion in tax increases for businesses owners, the people that create jobs and wealth. Where a 60% majority is required for any bill involving money the Democrats plan to pass the bill on “Reconciliation,” an exception to the 60% rule, reducing it to 50% by an agreement to allieviate gridlock, but reduces to just another way for Republicans to duck an issue by surrendering. The often ill-informed, and informing, press claim tax increases enabled the COVID-19 relief bill to be passed!

Tax increases Democrats picked to help keep their plan’s cost in check had the political benefit of being arcane, leaving the public uninformed, intentionally. Unlike raising the corporate tax rate or upping the top marginal tax rate on the rich, the ones they chose won’t produce many headlines,” according to Politico.

In the past, and logically, flooding the economy with enormous amounts of baseless currency debases it and in this case the amount is equal to the quantity in circulation so we can expect considerable inflation in the coming year.  It may be a good strategy to make any great purchase you have been considering now and enjoy the increase in Dollar value.  

“Since the provisions were added late in the legislative process, lobbyists didn’t have much time to rouse opposition to the plans.”

One of the changes limits the amount of losses people can claim on their personal income taxes to $500,000 for unincorporated businesses which is ridiculous as any business capable of having such a loss will have incorporated at least as an “LLC,” Limited Liability Company.  Where Congress is essentially a lawyer’s club we have to wonder from where this provision has come?

Nonetheless, the Senate Finance Committee said this tax law change will raise $31 billion over 10 years, according to Politico, but a survey showed the people thought the economy would be harmed 99 to 1 and we agree from history and simple math analysis.   

The tax changes largely penalize success in business which means many will seek to find ways around inflation, which is very difficult if not impossible where so much baseless money has bben printed.  It will result in more scams like we have seen with “cryptocurrencies” at a time when iit is possible to convert to a digital currency that would be more efficient and eliminate counterfeiting, but require new kinds of law enforcement, on line, and new presentations in courtrooms.

Another tax change targets the amount businesses can deduct for employees’ pay when CEOs and other executives earn more than $1 million.  This is really a move toward socialism and it will be very interesting to see how it is received.

Businesses are normally allowed to deduct all their employees’ pay as an expense. This change would mean an additional $6 billion in taxes paid and looks like another “Full Employment For Lawyers” provision.

Finally, the COVID relief bill repeals a tax provision giving multinational companies flexibility in how they account for interest payment costs which is another big snarl in the bill.

Adrian Vance