The Trump tax policy allows work-arounds, it seems

Trump may be anti-elitist in that he believes, and seems to enforce, the idea that authoritarian tribalism makes the world function better for “your own people”.  The new GOP tax law, which is largely Trump’s first “achievement”, seems to reinforce that idea in several ways.

The tax policy is said to penalize residents of states with high state and local taxes and high state services. It is said to reward the “real world” economy supposedly in midwestern and southern states at the expense of the intellecuality and abstractions of the coasts.  Sounds like my first attempt at a book, “The Proles”.

James M. Pettit explores this idea in National Review, where he shows how blue states lose residents to red states.  Despite the situation right now in 2018, this could help “conservatives” in the long run. But we’ve seen this before.  I left New York City at the beginning of 1979 (a few years after NYC’s own “drop dead” financial crisis in 1975) for the lower taxes and living costs of Dallas.  Along with that came more conservative social values.  There was a tendency for families to segregate and for companies to move to the far northern suburbs (like Plano) to “get away from the blacks”. Moving probably delayed and prevented my own exposure to HIV, but we had to deal with a mean anti-gay climate in the early 80s when AIDS was first being publicized.  But generally, “conservative” areas want to see outlier people (like me) socialized into vertical tribes (extended families) so that governments don’t have to do as much.

But Vox (Dylan Matthews) proposes a scheme where blue states go to employer payroll taxes as opposed to state income taxes.  This would mean lower wages at first but possibly workers (and many employers) come out better after taxes are done, under the new scheme.

On January 1, Noam Scheiber (in Business Day, New York Times) suggested that the new tax law will encourage more workers to become independent contractors, because sole proprietorships will now be able to deduct some expenses. If I really sold more individual copies of my own books (or really tried and got more advertising revenue from my blogs) this could help me.

And today, David Herzig (p  A15) suggested that states are losing sales tax revenue when you buy online (except through Amazon Prime, which collects it). One issue is that states (according to an earlier Supreme Court ruling, which may get overturned) can only enforce taxes in states where they have physical presence (and Amazon is building its own stores). I actually started filing sales tax with Virginia in 2016, and have made a practice of paying it to Virginia wherever books are sold (like Washington DC book fares). In a few cases I have given complimentary copies and reported them as sales and paid a small tax. I stopped for a while when I moved because of possible issues regarding business licenses and the new condo residence (my “downsizing”) but I expect to resolve this by March.

All of this suggests I need to get more serious about “selling” on a transaction level myself, and I’ll get into that soon.

(Posted: Tuesday, January 2, 2019 at 10 PM EST)

How would various earned income tax credit reform proposals affect family structure, and incentive to work?

Dylan Matthews, of Vox Media, explores a proposal by Len Burman, an economist with the Urban Institute and Syracuse University, to raise middle class standard of living, with a Flat Tax Credit, where the federal government matches the first $14000 of wages regardless of family structure.  He pays for the program with a European-style Value Added Tax, or VAT, of about 15%, which makes most goods and services more expensive for everyone (food might be excepted).  It also throws middle class wage earners into higher tax bracket.  It’s not immediately how this applies to freelance income or commissions.

The Vox article, “A bold new plan promises to fix middle-class wage stagnation”, provides comparison to the current Earned Income Tax Credit, or EITC, which only goes to families or people which dependent children. The new proposal is much more helpful to the childless.  Burman would also incorporate a separate Child Tax Credit, which dwindles away for richer families.

Two big ideas come to mind.  One is the balance in wealth between conventional families with children and single childless people.  The social climate today is much more nuanced now with allowing same-sex marriage and encouraging gay parents than it was twenty years ago, as my own I.T. career was near its maturity.  Back then, pundits talked about the “marriage tax” and at the same time complained about unfair treatment of singles.  In practice, I had a lot more disposable income than most of my married-with-kids coworkers, because my housing and auto costs were less and I borrowed much less – even if I made less and sometimes paid higher taxes.  A couple times co-workers actually complained that I could spend all my income on myself and they (because of their “choices”) could not.  But it seems that even then the EITC should have been helping my coworkers more than it actually was.  Many of them complained about debts and bills.

It’s pretty easy to see how this idea can migrate into right-wing concerns about low birth rates and people waiting too long to have or adopt children.

The other issue here would seem a statement about the value of work, itself.  Indeed, Burman’s ideas also take a step toward addressing the problem of young adult men dropping out of the workforce and becoming “watchers”.  (See May 3, 2017 for link).  I think it also applies to retirees.  Indeed, I tended to “coast” in neutral gear after retiring, as I found many of the opportunities laced with hucksterism and manipulation.  That has an effect on my own credibility as a freelance writer now, as I have explained.  With Burman’s ideas in place, I’d need to take much more seriously opportunities to get paid by other parties who say “We give you the words”.

Matthews also provides a comparison to proposals for Universal Basic Income.

(Posted: Saturday, Aug. 26, 2107 at 11 AM EDT)