Category archives: Economics

Socialism, the Coronavirus, and Bernie Sanders’ America

by Worth Loving , Israel Lopez Ramirez

April 7, 2020

Over the last month, normal everyday life in the United States has come to a screeching halt as the government works to stop the spread of the deadly coronavirus. Busy cities like New York, Los Angeles, and even Washington, D.C. have become ghost towns. Most businesses and restaurants are either shut down or open only on a very restricted basis. Grocery store shelves are empty as people scramble to grab essential items like toilet paper, water, and meat, not knowing when the lockdown will end. The stock market has plummeted and wiped out most of the Trump-era gains. Companies are being forced to lay off employees as events are canceled and revenue falls. For the first time, many in America are experiencing what food shortages and government-imposed mandates are really like.

A couple weeks ago, my roommate and I visited our local grocery store to stock up on some essential items. We weren’t planning to hoard all the toilet paper, meat, or bottled water, but we wanted to get enough in case the virus prevented us from getting out much over the coming weeks.

Growing up in eastern North Carolina, I’ve experienced my fair share of hurricanes. I’ve seen people board up their homes and stock up on generators and bottled water more times than I can count. I’ve also experienced many times how unaccustomed Southerners are to snow and ice in the winter. At the first sight of a snowflake or ice pellet, people rushed to the stores to stock up on bread and milk. To this day, I’ve never figured out why those two items seemed to fly off the shelves with the threat of winter weather. Milk sandwiches never appealed to me.

When my roommate and I visited the grocery store a couple weeks ago, I was shocked. It was relatively late in the evening and the store was still full of people. All the meat, produce, pasta, soup, milk, eggs, water, toilet paper—completely gone. As we tried to scrounge up a few essential goods, I looked at my roommate and said, “I’ve never seen anything like this before.” To which he replied, “This is what it’s like in Venezuela—but always.”

My roommate, Israel Lopez Ramirez, has lived here in the United States in Washington, D.C. for nearly three years now. Before that, he spent his entire life in Venezuela. He owned a graphic design company and enjoyed many years of economic success. That is, until socialism overtook his beloved country.

Venezuela is one of the richest countries in South America in terms of natural resources, particularly oil. As the country became more industrialized in the 20th century, it borrowed money to develop those natural resources. When the world economy went into a recession in the 1970s and 80s, demand for oil decreased and its price plummeted. In Venezuela, this resulted in skyrocketing inflation, stagnant wages, and many people losing their jobs.

Capitalizing on the nation’s economic distress, Hugo Chavez was elected president in 1999 on a pledge to save working Venezuelans from the “evil capitalists and evil corporations.” Inspired by his hero Fidel Castro, he conducted a massive takeover of the country’s health care system and private sector industries and instituted sweeping social welfare reforms. As a result, many companies left Venezuela, leaving the country with few jobs and skyrocketing inflation. Chavez also pushed through a new constitution, which gave his government more central control and began restricting many fundamental liberties like freedom of the press, freedom of assembly, and freedom of speech.

In 2013, Chavez died and Vice President Nicolas Maduro assumed the presidency. Maduro has continued the socialist policies of his predecessor. Many Venezuelans are out of work or severely underpaid. Inflation continues to skyrocket, and most Venezuelans cannot afford even the most basic of necessities. Grocery stores continue to experience shortages due to government controls and a lack of supply. Crime is now rampant in the country as people resort to desperate measures to find these basic necessities and as the Maduro-backed military hunts down its political opponents.

When my roommate compared the empty shelves at our local grocery store to what is happening every day in Venezuela, it really hit me. Many young Americans my age are embracing socialism at an alarming rate. Democratic presidential candidate Bernie Sanders (I-Vt.) has capitalized on the enthusiasm of these millennials as well as the fury of the working class. He has normalized once radical proposals like Medicare-for-All, the Green New Deal, and free college.

But what’s more disturbing is Sanders’ praise for totalitarian regimes around the world. He has repeatedly refused to call Venezuelan President Nicolas Maduro a tyrant. Among other things, he praised the Soviet Union’s investment in culture and their mass transit system in the 1980s. In 1985, Sanders praised the media censorship of Nicaragua’s Sandinista-led government. And he has repeatedly praised the housing, education, and health care programs of Fidel Castro’s Cuba. In a 60 Minutes interview with Anderson Cooper in February, Sanders once again praised certain aspects of the Cuban dictator’s regime. Many Democratic leaders quickly condemned Sanders’ comments, and his remaining rivals for the nomination immediately capitalized on that anger. As a result, Sanders’ polling lead evaporated, all but ending his chances at the nomination.

My roommate was forced to leave Venezuela because the government seized his assets and took over his business. Because of statements he has made on social media against the brutal Maduro regime, he cannot return to the country for fear he might be thrown into prison or worse. His family remains in Venezuela and continues to experience critical food shortages and skyrocketing inflation.

Venezuela is an example to the United States and any other capitalist nations—socialism does not work. It is always best to let markets operate free of government intervention. More importantly, it is critical to protect our fundamental First Amendment rights, something all socialist regimes inevitably take away. And while Bernie Sanders will deny any perceived comparison to the human rights violations of authoritarian regimes, some of his past statements indicate otherwise. In 2017, Sanders suggested that then nominee for Assistant Director of the Office of Management and Budget Russ Vought was unfit to hold the office because of his Christian belief that Jesus Christ is the only Savior.

While Sen. Sanders no longer has a viable shot at the Democratic nomination, we came dangerously close to having a presidential nominee from a major political party who embraced communist ideas. And while likely Democratic nominee Joe Biden is quick to criticize Sanders for his praise of communist regimes, he still supports many of the same socialist policies. He plans a further government takeover of the economy, education, and the health care system. Even more concerning is that he has made passing the Equality Act a centerpiece of his campaign, a radical piece of legislation that will severely infringe on our First Amendment and privacy rights. To put it plainly, Joe Biden is just like Bernie Sanders, except with more charm and subtlety. If he is elected president in November, he will take us down the same socialist road.

Make no mistake. History has proven time and again that socialist leaders start out by promising to work for the people. But they always inevitably descend into total government control of the economy, health care system, and education, and end up taking away fundamental freedoms. In November, we must get out to the polls and resolutely reject this radical agenda, sending a clear message to the Democratic Party and to the world that socialism is not welcome in the United States. Not now and not ever.

How the New Tax Bill Helps Families

by Andrew Guernsey

January 4, 2018

The Tax Cuts and Jobs Act (H.R. 1 “TCJA”), signed into law by President Donald Trump on December 22, 2017, provides numerous provisions that benefit working families.

Child Tax Credit

The Child Tax Credit (CTC) has a positive impact on individual families and the economy as a whole and helps parents bear the costs of raising their children.

The Tax Cuts and Jobs Act increases the CTC for 2018 through the end of 2025 (unless Congress renews it) by:

  • Increasing the CTC to $2,000 for children under 17;
  • Making the CTC refundable up to $1,400 (indexed for inflation) for low-income working families based on
    • 15 percent of earned income in excess of $2,500; or
    • (if greater) the amount of payroll taxes in excess of the earned income tax credit, for a taxpayer with three or more qualifying children;
  • Removing the CTC marriage penalty for the income phase-out, and increasing the income threshold to $200,000 for single filers and $400,000 for married couples filing jointly;
  • Providing a $500 non-refundable Family Care Credit credit for dependents who don’t receive the CTC; and
  • Requiring a qualifying child to have a Social Security Number for a taxpayer to claim the CTC

Obamacare’s Individual Mandate Penalty

Starting in 2019, the Tax Cuts and Jobs Act eliminates Obamacare’s individual mandate penalty. This helps many working families obtain relief from being forced into an Obamacare health insurance plan. Repealing the individual mandate penalty also allows individuals to forgo purchasing coverage if doing so violates their conscience. This is especially relevant for individuals who live in the states where there are few or no pro-life health insurance plans that exclude coverage of abortion.

Marriage Penalties

Marriage penalties exist in the tax code and also in welfare programs. The penalty generally applies in the tax code when a tax deduction or credit applies to single and married persons based on income, but a married couple is eliminated from receipt of the benefit making less than 200 percent of an eligible single person’s income.

Income Tax Brackets

The Tax Cuts and Jobs Act has no marriage penalties for five of seven tax income brackets for 2018 through the end of 2025 (unless Congress renews it).

  • Marriage bonus in the 22 percent bracket. Married couples filing jointly have a 2 percent lower rate than single filers for the first $25,000 they make over $140,000 in taxable income. This is a maximum $500 bonus, decreasing income taxes by up to 1.41 percent.
  • Small marriage penalty in the 32 percent bracket. Married couples filing jointly have an 8 percent higher income tax rate than single filers for the first $5,000 they make over $315,000 in taxable income. This is a maximum $400 penalty, increasing income taxes by up to 0.61 percent.
  • Large marriage penalty in the 37 percent bracket. Married couples filing jointly have a 2 percent higher income tax rate than single filers for the first $400,000 they make over $600,000 in taxable income. This is a maximum $8,000 penalty, increasing income taxes by up to 2.59 percent.

Alternative Minimum Tax

The Tax Cuts and Jobs Act reduces marriage penalties for the Alternative Minimum Tax (AMT) for 2018 through the end of 2025 (unless Congress renews it) by removing the marriage penalty for the AMT income phase-out ($500,000 for single filers and $1 million for married couples filing jointly). TCJA retains the marriage penalty for the AMT exemption ($70,300 for single filers and $109,400 for married couples filing jointly).

  • Due to the marriage penalty in the AMT exemption,
    • Married couples filing jointly are taxed at 26 percent higher rate than single filers for the first $31,200 they make over $109,400 in taxable income. This is a maximum $8,112 penalty, increasing the AMT by up to 22.19 percent.
    • Married couples filing jointly have a 2 percent higher AMT tax rate than single filers for the first $31,200 they make over $295,700 in taxable income. This is a maximium $624 penalty, increasing the AMT by up to 0.71 percent.

Other Marriage Penalty Provisions

  • Retains a marriage penalty for the $10,000 State and local income tax (SALT), property tax, and/or sales tax deduction, which is equal in amount for single filers and married couples filing jointly. This is a maximum $3,700 penalty.
  • Removes the marriage penalty in the Child Tax Credit phase-out ($200,000 for single filers, $400,000 for married couples filing jointly).
  • Fails to address the marriage penalty for the Earned Income Tax Credit.

Alimony Deduction

The Tax Cuts and Jobs Act permanently repeals the alimony deduction, which subsidizes divorce. A divorced couple can often achieve a better tax result by receiving a tax break for payments between them than a married couple can. Removing the alimony deduction restores equitable treatment for divorced and married couples’ expenses for child support.

529 Education Savings Accounts

The Tax Cuts and Jobs Act permanently allows 529 education savings accounts to be used for up to $10,000 per year per child for K-12 tuition expenses at an elementary or secondary public, private, or religious school.

529 plan contributions have tax-free earnings and are exempt from the annual federal gift tax if under $14,000 for that year ($28,000 for married couples filing jointly). Contributions to 529 plans receive significant tax breaks in many states. Previously, the 529 plans were only allowed to be used for higher education related expenses.

Death Tax

The Tax Cuts and Jobs Act doubles the tax exclusion from the estate tax, also known as the “death tax,” thereby shielding from taxation the first $11.2 million (indexed for inflation) of bequeathed assets. This provision applies for 2018 through the end of 2025 (unless Congress renews it).

The death tax is double taxation that handicaps families, and particularly family-owned businesses, by imposing heavy and burdensome taxes on bequeathed assets. Families often work as a unit to build their small businesses, but when a parent dies with the intention of leaving his or her small business to the children who helped build it, that transfer of assets is often taxed at such high rates that the business cannot continue operating and pay the government, causing the grieving family to close the business’s doors.

Adoption Tax Credit

The Tax Cuts and Jobs Act retains the adoption tax credit in current law, which is currently a $13,570 non-refundable credit per eligible child (with a phase out for wealthier individuals). According to the U.S. Department of Health and Human Services Administration for Children and Families, in 2015 over 111,000 children were waiting to be adopted. Maintaining the adoption tax credit in current law helps adoptive children find loving families.

Standard Deduction and Charitable Giving

The Tax Cuts and Jobs Act repeals the deduction for personal exemptions, including the taxpayer, the taxpayer’s spouse, and any dependents. The legislation consolidates the personal exemption for the taxpayer and taxpayer’s spouse into a larger standard deduction. The standard deduction is substantially increased from $6,300 to $12,000 for individuals and from $12,700 to $24,000 for married couples (and surviving spouses), giving working parents more take-home pay to provide for their families. The legislation consolidates the personal exemption for children and dependents into the expanded child tax credit and a new family tax credit to care for non-child dependents. However, increasing the standard deduction could harm charitable giving, including to nonprofits and churches, since fewer people will likely itemize.

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The Stark Contrast on Abortion at the National Conventions - In Quotes
by David Closson (Sept. 1, 2020)

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