Feed aggregator

The Many Reasons to Run for President When You Probably Don’t Stand a Chance

NY Times - Sat, 2019-04-13 09:22
There are book deals and TV contracts and maybe a cabinet position if your side wins. Recent history suggests there is almost no downside to giving it a shot.

Nipsey Hussle Loved His Blackness

NY Times - Sat, 2019-04-13 09:18
His story is so compelling because love was at the core of his beliefs and behavior.

Trump’s immigration policies have been a failure. Neither he nor Democrats have much of a solution to the current problem.

Washington Post - Sat, 2019-04-13 09:18
Trump seeks to blame Democrats for the border crisis. They say it’s his fault. Whoever is president in 2021 will still have to face the problem.

Who had the most merciful death on Game of Thrones? Science has an answer

Ars - Sat, 2019-04-13 09:15

Enlarge / You know nothing, Jon Snow—like, maybe wear a hat when conditions are freezing in the North. Even if it musses up your luscious locks. (credit: HBO)

Warning: This story contains some mild spoilers from the first seven seasons of Game of Thrones.

The world of Game of Thrones may be fictional, but that doesn't stop its fans from heatedly arguing about all the possible underlying science, because nerd-gassing about one's favorite science fiction is a time-honored tradition. Just how hot is dragon's breath? Is there a real-world equivalent of wildfire? What's the best and worst way to die? And how fast would Gendry have to run back to the wall to send a raven to King's Landing requesting help?

These and other scintillating topics are discussed in a forthcoming book by physicist (and uber-fan) Rebecca Thompson, Fire, Ice, and Physics: The Science of Game of Thrones. The book comes out in October from MIT Press, but as we gear up for the premiere of the final season Sunday night, Thompson graciously gave us a sneak preview into some of the burning science questions she investigated.

Read 15 remaining paragraphs | Comments

Pete Buttigieg pushed an aggressive plan to revitalize South Bend. Not everyone felt its benefits.

CNN - Sat, 2019-04-13 09:00
Stacey Odom was skeptical of Pete Buttigieg, when, in 2012, he became the young mayor here in South Bend.

Central American Farmers Head to the U.S., Fleeing Climate Change

NY Times - Sat, 2019-04-13 08:35
The problems plaguing farmers in Honduras and elsewhere have mounted with rising temperatures and increasingly unpredictable weather.

Boston Marathon organizers prepare for another rainy race

CNN - Sat, 2019-04-13 08:35
With the possibility of a repeat of last year's cold, rainy race day, Boston Marathon organizers are making changes to Monday's run.

House Democrats give IRS hard deadline of April 23 to turn over Trump tax returns, say administration’s concerns ‘lack merit’

Washington Post - Sat, 2019-04-13 08:34
House Democrats pushed back against Treasury Secretary Steven Mnuchin’s skepticism over their request for the presidents’ private records

How a mobile game is reopening a hidden chapter in Taiwan’s history

Ars - Sat, 2019-04-13 08:30

Enlarge / Some imagery from the mobile game, Unforgivable.

Thirty years ago, the grandfather of a Taiwanese-American NYPD detective named Danny Lin was thrown off a cliff in Taipei, the capital of Taiwan. The killing took place during what is known today as the White Terror, a 40-year period of violent political suppression and martial law in Taiwan in the middle 20th century. The killer was never identified. Bent on solving his grandfather’s cold case and prompted by the admissions of a mysterious Japanese-Taiwanese woman in a Manhattan ramen restaurant, Lin travels to Taiwan. He knows little about the place, only that, somehow, he must find answers.

Until the last couple of decades, this kind of story, focused on Taiwan’s brutal authoritarianism under military rule, would have been a touchy topic in Taiwan. Today, though, Detective Lin’s saga is the fictional plot behind Unforgivable: Eliza, a popular augmented reality game played on a smartphone, similar to Pokemon Go. The game unfolds as a digitally enhanced tour of New York and then Taipei, with bright manga-esque presentation.

Unforgivable was penned by the Taiwanese-American crime novelist Ed Lin (Incensed, Ghost Month, One Red Bastard) and developed by Allen Yu, the 34-year-old Taiwanese founder of Flushing-based Toii Inc. For these game makers, Lin’s story has been a way to get a new generation to engage with the country’s past. Their efforts parallel a larger trend of younger Taiwanese people exploring their parents’ and grandparents’ lives under military rule.

Read 34 remaining paragraphs | Comments

Why did Ecuador finally give up Assange?

CNN - Sat, 2019-04-13 08:28
Hours after Julian Assange was ousted from his diplomatic refuge at the Ecuadorian embassy in London, the country released a laundry list of alleged transgressions which brought the WikiLeaks founder's seven-year residency to an end.

CNN's Victor Blackwell calls out Trump 2020 adviser: Absolutely untrue

CNN - Sat, 2019-04-13 08:26
CNN's Victor Blackwell asks Donald J. Trump campaign advisory board member Steve Rogers about the President's rhetoric on violence during his 2016 campaign rallies.

US military's 7-year plan for Somalia

CNN - Sat, 2019-04-13 08:19
This week President Donald Trump signed an executive order extending a presidential declaration of a national emergency concerning Somalia for another year, calling the Islamist insurgency plaguing that country an "unusual and extraordinary threat" to the US.

Analysis: Who wins under Trump's tax law

CNN - Sat, 2019-04-13 08:02
Tax day isn't until Monday, but there have already been some surprises for Americans filing their first income tax returns under President Donald Trump's 2017 law.

Drew Peterson says he is a celebrity in jail

CNN - Sat, 2019-04-13 07:57
10 years after he went to prison, Drew Peterson, a former cop who was convicted for the murder of his wife, speaks out.

3 experts explain our new tax code

Futurity.org - Sat, 2019-04-13 07:51

As the tax filing deadline nears, Americans continue to navigate tax season with curiosity and caution as they find how the Trump administration’s 2017 tax legislation personally affects them.

Democrats criticized the legislation, originally known as the Tax Cuts and Jobs Act of 2017, but officially called An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, but Republicans defended the law as a necessary overhaul to previous tax laws and a means to provide economic relief for the middle class.

The dueling partisan narratives left many taxpayers with a murky understanding of the law’s impact.

To gain a better grasp on the intricacies of the 2017 Act, professors David Kamin, Lily Batchelder, and Daniel Shaviro—tax law experts from the New York University School of Law—cowrote a paper analyzing the sweeping legislation which appears in the Minnesota Law Review.

According to the authors, “Many of the new changes fundamentally undermine the integrity of the tax code and allow well-advised taxpayers to game the new rules through strategic planning.”

Here, the authors describe how some may take advantage of the new system, and how changes to the tax laws may affect the US economy.

‘Cracking and packing’

David Kamin: One of the largest tax cuts in the legislation goes to “pass-through” businesses—where income is taxed at the level of the owner rather than the business. But, to be eligible for this tax cut, owners need to meet certain very complex criteria.

For those with higher incomes, this includes being in the “right” line of business. That means being an architect (eligible) and not a lawyer (not eligible). Selling skincare products (eligible) but not being a dermatologist (not eligible). The formalistic and largely arbitrary lines then allow for much gaming, including what we—borrowing from the election law context—call “cracking and packing,” pulling apart and combining businesses.

For instance, a dermatologist office might “crack” apart a skincare products business run out of the same office, share overhead expenses, and then try to assign as much of those overhead expenses as possible to the dermatology practice to maximize profits eligible for the deduction. Possibly abusive? Yes, but very hard for the IRS to catch.

Lily Batchelder: The bill creates large incentives for the wealthy to convert their labor income into business income. This was already an issue in the tax code because of the carried interest loophole and loopholes in the payroll tax. But the bill makes a bad situation much, much worse.

If a wealthy individual hires an elite tax advisor to make their labor income look like pass-through business income, they can cut their marginal tax rate by more than 7 percentage points. And if they don’t need to spend the income anytime soon and treat it as corporate income, they can cut their tax rate by 20 percentage points.

Theoretically, middle class families could engage in the same games but they are much less likely to do so for at least three reasons. First, middle class families would receive much smaller tax benefits from such gaming and in many cases, none. Second, they often have little leverage over their employers to restructure their compensation and, even if they did, probably would have to give up all of their employee benefits in exchange. This includes their health insurance, 401(k), and disability insurance. Last, they are less likely to be able to afford a tax advisor with the expertise to structure this kind of arrangement in the first place!

Gaming the system

Daniel Shaviro: One of the many disappointing aspects of the 2017 act was its failure to address the opportunities for sheltering labor income from tax at full individual rates, through use of the corporate tax. Pre-2017, the top corporate rate was far closer to the top individual rate than it is post-2017. The main rationale for the corporate rate reduction pertained to global tax competition for scarce capital. This has no bearing on the case where the owner-employee of a corporation pays herself far less than the market value of her work.

For example, suppose I create a wildly successful new start-up and pay myself zero salary, despite my becoming, in net worth terms, a billionaire via the stock appreciation. The income that my efforts yield will show up in the corporate tax base, and be taxed at only 21 percent. True, I would face a second level of tax on paying myself dividends or selling my stock, but even this would be at a reduced rate. And what’s more, I may not need to make such payments if I am sufficiently financially liquid, e.g., by reason of borrowing against the value of the stock.

Opinions in the “biz” differ on how frequently taxpayers will find it worthwhile to do this, given the difficulty of extracting funds from one’s company tax-free. What is plain, however, is that Congress in 2017 deliberately did nothing to prevent this from happening. Indeed, the final version of the 2017 Act reduced the efficacy of a provision in the House bill that would have slightly addressed the problem by setting the tax rate for “personal service corporations” (PSCs) at 25 percent rather than just 21 percent. In the final act that rate is just 21 percent, like the general corporate rate, causing the PSC rules to be close to meaningless as a defense against using corporations as a tax shelter for labor income.

Shaviro: In the international realm, the 2017 Act may actually have improved the law marginally. At a minimum, it created a new regime that could be tweaked by future Congresses to yield a better system than the previous one. However, the main new international rules that it added to the code unnecessarily created multiple opportunities for game-playing. Just to give some quick examples without getting too deep into the weeds:

The foreign-derived intangible income (FDII) rules, which provide a special deduction for exports by companies, such as Apple and Facebook, that have valuable intellectual property, create incentives for “round-tripping” goods—e.g., selling them to a foreign taxpayer, then buying them back with just enough bells and whistles to prevent the entire transaction from being disregarded.

Both FDII and the global intangible low-taxed income (GILTI) rules can create incentives to locate business assets abroad rather than at home.

The base erosion anti-avoidance tax (BEAT) can be gamed through such means as restructuring supply chains so one is purchasing sale items for customers from one’s foreign affiliates. The BEAT can also be gamed by adding lots of extra deductions (offset by lots of extra income so the sum total is a wash), so that so-called “base erosion tax benefits” will fall below an arbitrary “floor” (as a percentage of total deductions) that the BEAT imposes for no discernible reason.

Violating the WTO treaty?

Shaviro: The FDII rules almost certainly violate the World Tax Organization treaty, of which the US is a signatory. They are expressly an export subsidy, and the WTO makes export subsidies illegal. If other treaty signatories challenge the FDII rules, there is a very high probability that they’ll be held illegal, with the consequence that peer countries will be authorized to respond with targeted provisions of their own.

In the last 30 or so years, the US has enacted illegal export subsidy rules on three separate occasions. Each time the rule was held violative and the US backed down. Why do this again? I think the main answer was cynicism, but ironically the prospect of an overturn makes the US companies that wanted favorable tax treatment more leery than they would otherwise have been of setting up complex structures to take maximum advantage of the FDII rules.

‘An array of mistakes’

Kamin: The legislation was written at an extremely rapid clip, leaving an array of mistakes—some minor and some large. An early one to emerge was the “grain glitch.” In attempting to apply the pass-through deduction to businesses organized as cooperatives, especially prevalent in agriculture, legislators wrote in an even larger loophole by accident. Effectively, farmers selling to these cooperatives (think Ocean Spray cranberries) could potentially entirely wipe out their tax liability because of the glitch.

This one was large enough—and was causing sufficient chaos in the agricultural sector—that it was fixed. But most haven’t been. So, take another: one of the largest revenue raisers in the legislation was limiting the deductibility of state and local taxes for individuals to $10,000. However, the letter of the law seems to fail to apply that to another form of cooperative, a housing cooperative.

So, owners of pricey cooperatives in NYC may be able to deduct their property taxes without limit; by contrast, owners of traditional condominiums and houses will not. And the list could go on.

Major takeaways

Batchelder: The bill is heavily tilted towards the wealthy. According to the official Congressional budget scorekeepers, this year the average millionaire will get a tax cut of more than $27,000 on their personal tax return, compared to a tax cut of $431 for an average middle-class family earning $40,000 to $50,000. Even as a share of their after-tax income, the tax cut for the average millionaire is three times as large.

It is also a very costly bill. The Congressional Budget Office estimates that it will increase our national debt by $1.9 trillion by 2028, even after including its effects on the economy. These large tax cuts will eventually have to be paid for. If Congress pays for them by raising revenues in proportion to income, the vast majority of middle class and low-income families will end up worse off. These families will be hit even harder if the bill is paid for by cuts to programs like Social Security, Medicare, and Medicaid.

Shaviro: It’s often said that tax legislation should be judged by four main criteria: fairness, efficiency, complexity, and revenue adequacy. The 2017 Act, despite having good particular rules here and there, egregiously failed on all four counts.

It was an act of class warfare benefiting those at the top relative to everyone else, for the most part it reduced economic efficiency by creating perverse incentives and arbitrary distinctions between different activities, it made tax planning more complicated for those who can afford sophisticated tax advice, and it will probably lose on the order of $2 trillion of net revenue over 10 years, even if all supposedly expiring provisions are actually allowed to expire.

It was also the sloppiest, most poorly drafted tax legislation that I have ever seen, despite all the talent and effort deployed by hard-pressed staffers, because the process was so secretive and rushed.

Source: New York University

The post 3 experts explain our new tax code appeared first on Futurity.

Syndicate content