The Vastness Of The Trump Revolution Is Immeasurable, is what we wrote a few days after the election of President Donald J. Trump. Every day we see the immeasurable vastness of that victory.
There are two big Trump earthquakes about to take place. These are not the biggest Trump earthquakes that will rattle the world and this country. Those mega-MAGA-Trumpquakes we will write about at a later day. Today we discuss the biggest Trump earthquakes that are about to shake America.
These two imminent Trump earthquakes we confess have taken us by surprise. Indeed, we mocked the possibility of them ever happening under Trump or anyone else. Yet, here we are. They are about to happen.
We mean tax reform. We are not talking about the “tax reform” everyone else is talking about. We mean the revolutionary aspects about to be unleashed by the Trump tax reform plan.
As President Trump said in Missouri today, few if any presidents have accomplished as much as President Trump has in the ten months (only ten months????) since inauguration.
It’s not only the massive economic growth (3.3 percent in the third quarter despite the hurricanes), the confidence of consumers as we approach the biggest Christmas season in decades, and the cultural impact President Trump has already had on America. Now the big ones are about to hit. Hardest hit by the Trump earthquakes? California. Then New York. Then Illinois and New Jersey. Blue states all.
We have not thought any of this would happen. We did not think tax reform would happen. We thought (and still think) John McCain and other NeverTrump GOP establishment Republicans will do everything and anything to stop President Trump. Still, it might happen. But happen or not, the earthquake will now shake your windows and rattle your halls, at some point. It will happen because now we see that it can happen.
What are these Trump earthquakes? It’s SALT and the education wound.
EARTHQUAKE 1 SALT
While most everyone focuses on how the Trump tax plan will affect them personally we’re looking at the policy and the political implications of that policy. The leftists in the “blue states” started a civil war and now President Trump is bringing in the Grand Army of the Republic.
“SALT” in this instance stands for “state and local taxes”. Most Americans will not be affected adversely by the proposed elimination of state and local tax deduction write-offs on federal taxes because President Trump also proposes a doubling of the standard deduction. But some Americans will be hit hard by the elimination of SALT deductions on federal income taxes.
Who will be hurt by the elimination of SALT deductions in federal taxes? Those with high incomes in high tax states will be hurt because the standard deduction increases will not make up for the loss of SALT deductions in federal taxes. But who will really, really, really, really be hurt the most? Blue state Obama Dimocrat politicians:
Trump’s Tax Plan Could Be Painful for New York, New Jersey, and California
Wealthier residents of high-tax states would be especially hard hit if they can no longer deduct state and local taxes from their federal taxes.
Take a moment to fully grasp the revolutionary implications of what this means. It means that Obama Dimocrats that control these blue states will be put under pressure by their powerful residents to reduce state and local taxes. The very wealthy that have supported the Obama Dimocrats will be the hardest hit and the ones who will either have to move from the blue states or else demand that state and local taxes be lowered. It’s revolutionary:
“There is no doubt that if you are a New York or California resident, your largest deduction, by a factor that could be as high as 10, is the state and local income tax,” said tax expert Robert Willens, of New York-based Robert Willens LLC. “Historically a high-state tax was mitigated by the fact that you were able to deduct it, so it was really costing you 60 percent or 65 percent of what you were paying to the state.” [snip]
The deduction ends up being far more valuable in states with the highest tax burdens.
Nationwide, wealthier taxpayers benefit the most from the deduction. More than 88 percent of its benefits go to Americans who earn more than $100,000 a year, according to the Tax Foundation.
We never thought this could happen. Elimination of SALT deductions was tried before and always failed bigly:
Past efforts to end the deduction of state and local taxes, back in the Reagan years, never took hold, because the hardest-hit states complained so bitterly about it, said Willens. In the recent presidential election, Trump won none of the 10 states where residents benefit the most from the state and local tax deduction. The highest-tax state the president did take is Wisconsin, where 32 percent of taxpayers claim the deduction, which represents 6 percent of their adjusted gross incomes. He won all 10 states that benefit the least from the deduction, with the exception of Nevada. Alaskans benefit the least of all: 22 percent of filers in Alaska claim the deduction, but it represents just 1.5 percent of their incomes, according to Internal Revenue Service data.
If the change goes through, there’s little that people can do except maybe decamp for Florida or Texas, where there is no state income tax. Not that tax collectors in high-tax states like New York make it easy to move.
Whether it happens now or not, it is clear that it will happen because President Trump has made it a very real possibility. We never thought President Trump could accomplish this.
The very wealthy that have provided financing for Obama Dimocrats will have to (a) lose money, or (b) demand that Obama Dimocrats they donate to cut state and local taxes, or (c) move to red states. Get a dog to eat a dog:
New York Could Lose Some Top Earners Under GOP Tax Bill, Goldman Says
New York City could lose some of its highest-income residents if the tax bill making its way through the U.S. Congress becomes law, according to estimates from Goldman Sachs Group Inc.
Initial analysis suggests that the legislation “could eventually lower the number of top-income earners in New York City” by 2 percent to 4 percent, Goldman economists led by Jan Hatzius wrote in a note dated Nov. 24. The trigger would be a provision that restricts the ability of taxpayers to deduct the levies they pay to state and local authorities, which would disproportionately hit locations with relatively high rates. [snip]
“We now expect a repeal of the federal deductibility of state and local income taxes as well as a $10,000 cap on the property-tax deduction,” Goldman economists wrote as the Senate prepares to vote for its version of the tax overhaul. “The increased tax gap between high- and low-tax areas may moderately increase moves to the latter.” [snip]
California, Connecticut, New Jersey, New York and Maryland would see a drop in the value of income- and property-tax deductions of almost 15 percent of their total state and local taxes, Goldman says.
“These changes could create additional fiscal challenges for the high-tax areas, some of which already face structural pension funding issues,” the economists said.
The high tax Obama Dimocrat blue states have for years raised local and state taxes without facing protests from blue state citizens. That’s because the ability to deduct these high state and local taxes on federal income tax forms made the increases in local and state taxes relatively painless. After all, other Americans paid for the high taxes in high tax states, so it was all gain no pain. Now, because of President Trump reality must be faced. Now the high tax Obama Dimocrat blue state will get pain but no gain.
If citizens of high tax Obama Dimocrat blue states want tax relief they will have to confront and remove the tax and spend Obama Dimocrats. Or move to red states.
Throw in the ObamaCare individual mandate repeal which might be included in the final tax plan and the Obama Dimocrat run blue states will be hit even harder. And if the Graham/Cassidy ObamaCare repeal plan comes to pass blue states will have to either stop providing ObamaCare to everyone and anyone (including illegal immigrants either through phony documentation or other means) or cut benefits to American citizens — or have to pay for it from tax dollars extracted from the blue state citizens. But that is a discussion for another day.
BLUE ACADEMY BLUES
The second Trump earthquake to come will rock the cultural landscape as well as the political landscape. We’re talking colleges and universities in a snowflake meltdown:
House GOP to Propose Sweeping Changes to Higher Education
Revamp would put caps on student loans, foster new paths to work force
The Republican-controlled U.S. House of Representatives this week will propose sweeping legislation that aims to change where Americans go to college, how they pay for it, what they study, and how their success—or failure—affects the institutions they attend.
That is all in the future when powerful academic institutions will have to behave responsibly and produce results for the students they currently extract money from. But not all the reforms are in the distant future. Some of the changes are shovel ready. The Academy is about to be buried in a Trump earthquake:
GOP tax plan rattles higher education
The proposal reflects a growing sense of colleges, universities as bastions of privilege.
Congressional Republicans’ plans to slap unprecedented new taxes on higher education have left college leaders shocked and scrambling — the latest salvo in what some observers say is a growing culture war on a higher education system seen as elitist and out of touch.
While most college leaders said they don’t believe they were targeted directly in tax reform legislation — and are rather collateral damage — they say the hit was startling, as higher education has long enjoyed bipartisan support. Higher education also is a powerful lobbying force on the Hill.
In interviews with POLITICO, college presidents contended the tax proposals (H.R. 1 (115)) would be a devastating blow that would make college — especially graduate school — more expensive, and further out of reach of low- and middle-income families. That argument, however, may not go far, as polling shows many Americans are increasingly wary of colleges and universities, and are generally supportive of tax cuts.
“Very few Americans care” about the plight of colleges and especially about the problems of graduate students, said Jason Delisle at the conservative American Enterprise Institute. “Very few of them are privileged enough to get a graduate degree from an elite institution. I think they’re like, ‘Complain all you want.’ It’s just not going to resonate with Main Street America.”
Indeed, recent data shows the nation’s most elite schools have long catered mostly to the wealthy, serving relatively few low- and middle-income Americans. Dozens of colleges enroll more students from the top 1 percent of earners than the bottom 60 percent, according to data from the Equality of Opportunity Project.
The powerful masters of colleges and universities will focus all their power to stop these responsible changes. The colleges and universities will try to make the argument that students will be hurt by the tax changes although the rise of the standard deduction would offset any higher taxes individual students will pay. What the colleges and universities fear is the loss of their massive endowment funds:
A recent poll from Pew found 58 percent of Republicans view colleges negatively, while 72 percent of Democrats view them positively.
The tax bills, experts say, may well be part of that sentiment. Both the House and Senate levy new taxes on the largest private college endowments. The House would end deductions for student loan interest and tax tuition waivers for graduate students.
“I think it’s part of a culture war … no question,” said Philip Altbach, a research professor and founding director of the Center for International Higher Education at Boston College. [snip]
College leaders fear the tax plan is the latest sign they are losing the battle over public perception. The proposal comes after years of rising tuition prices have led many Americans to believe college is too expensive. It also follows a year of intense scrutiny over cultural issues on campuses, including conflicts over free speech that have crystallized the view among some Republicans that colleges are pushing a liberal agenda.
“We’re being challenged on all of these fronts, and we see that reflected for example in the tax legislation,” Rice University President David Leebron said. [snip]
But perhaps the most in-your-face item aimed at higher education — especially elite colleges and universities — is a plan in both the House and Senate versions that would tax private university endowment earnings. The tax would only apply to private universities with at least 500 students and endowment assets of at least $250,000 per student — between 60 and 70 schools.
Harvard University alone has an endowment of well over 34 billion dollars, Princeton over 22 billion dollars, Stanford 22 billion dollars, Yale has over 25 billion dollars. Poor darlings want everyone to pay taxes, now they can join in the fun.
To think it took a billionaire to get these lowlifes to pay taxes.
The Trump earthquakes will soon start to shake rattle and roll.