BALTIMORE – “Tax Law’s Effect Fuels Farm Outcry,” read one Wall Street Journal headline yesterday.
“A provision inserted into the tax code during Senate and House negotiations in December…” begins the descriptive paragraph.
Who inserts a provision? A selfless citizen serving the interests of the public? An earnest congressman with no thought to his own career? A dutiful bureaucrat stirred to action by vapors of fairness and justice wafting through the House Ways and Means Committee?
We invite you behind the scenes… How are our laws written? For whom?
“If the idea was to drain the Swamp by simplifying the tax code,” began one of our tax experts in a meeting yesterday, “the result was a total failure. It’s more complicated than ever.”
Today’s Wall Street Journal confirms it. Far from a nation of simple laws that everyone has to follow, we have become a nation of gnostic codes, hidden rules, and disguised favors.
“The new tax law is complex, with implications that will be different for everybody,” says Merrill Lynch in a full-page ad.
Our tax team was trying to explain to your editor how the Alternative Minimum Tax (AMT) had been removed for many people, but not for us… and how we could get a deduction of 20% from our pass-through taxable income if we had enough of a wage base to support it.
We were pretty sure that the knee bone of the AMT – which gave us an effective rate of about 28% – was somehow connected to the leg bone of the newly modified, tarted-up, and adjusted pass-through rate of 29.5%. But we never did figure out how.
Candidate Trump promised a tax system so simple that you could file your taxes on a postcard. But President Trump lay low when the insiders wrote the new tax law.
There was not even any need to read the final legislation – what would be the point?
And so, the GOP tax bill, like every other piece of legislation, regulation, and win-lose flimflam emanating from the 2000 ZIP code around the nation’s capital, became Law of the Land.
That is, by connivance and collusion. It may be the law of the dry land, but it is by, for, and of the Swamp.
Welcome to the Swamp
The American people – and the economy – would be better off with the aforementioned postcard-sized tax return. You total up your income. You pay 10% to the feds. Case closed.
No more manipulating earnings… changing business models… looking for loopholes… paying $700-an-hour tax lawyers… and letting the tail of taxes wag the dog of real output.
But where would that leave the fleas?
The insiders would be out of luck – unable to use their positions as lobbyists, policy wonks, campaign contributors, and politicos to conspire against the public.
And now that Washington has imposed its new tax rules, people are discovering which of the elite had the best lobbyists.
As it turned out, the provision that affects farmers, mentioned above, will “give cooperatives a significant edge” that “stands to benefit co-op giants including American Crystal Sugar Co., Land O’Lakes Inc., CHS Inc., and Ocean Spray Cranberries Inc.”
Who “inserted” that last-minute provision? Is it too much of a stretch to suggest that these companies’ lobbyists did the job?
Meanwhile, the blade comes down on the necks of their competitors.
The Journal quotes an independent operator: “[Under] this law, if they don’t change it, the scenario is that we’ll go broke.”
Welcome to the Swamp, where the swamp critters slither and slather… playing by swamp rules… and fighting over other people’s money.
Kick in the Pants
Meanwhile, the poor realtors!
They should give their lobbyists a kick in the pants.
“The National Association of Realtors, one of the largest and wealthiest lobby groups in the U.S.,” is among the biggest losers in the tax-code overhaul, reports the Journal on page B6.
“[T]he legislation blunts the advantage of the mortgage-interest deduction, which is often a key factor in home-buying decisions,” the paper explains.
Whoa! The realtors’ lobbyists inserted that goodie into the law many years ago, fair and square. How come they’re losing it now?
“A turning point came in the lead-up to the House bill when the National Association of Home Builders split from the realtors…” according to the article.
How do you like that? The builders stabbed the realtors in the back, inserting their own provision.
“The brokers’ lobby was hurt when a major home-builders group took a different position than it did,” the report went on.
Government is always a Swamp-based, win-lose business. And win-lose deals always make everyone – in the aggregate – poorer.
Real reform doesn’t mean switching winners and losers. It means reducing the scope of government power… to allow more win-win deals that make us all better off.
That was the appeal of the “Drain the Swamp” campaign pitch… and the postcard-sized tax return.
Pity they never went anywhere…
MARKET INSIGHT: COMMODITIES BREAK OUT
By Chris Lowe, Editor at Large, Bonner & Partners
Commodities are breaking out…
Today’s chart is of the S&P GSCI Index.
It tracks 24 commonly traded commodities, with a heavy skew toward crude oil.
As you can see, for the past two years, the index traded in a range between 14 and 16 points – typical of a directionless market.
But in December, it broke out above 16 points… and has been climbing higher ever since.
If this bullish trend continues, expect much more talk of the return of inflation in 2018.
Rising commodities prices are a major driver of rising consumer prices.
– Chris Lowe
Editor’s Note: Commodities have been beaten down for years. But as Chris showed, they could be poised for a breakout. Legendary speculator Doug Casey believes commodities investors have the potential to make a fortune in the coming supercycle. He reveals how right here.
America Has a New Dominant Industry
Many have predicted it, but it finally happened. New data from last quarter confirms that America’s largest source of jobs is no longer manufacturing or retail. It’s this industry instead.
How to Survive the Crypto Bubble
Jeff Brown, Bill’s top technology analyst, has a message. Most cryptocurrency investors are just gambling. Jeff lays out what could ultimately pop the crypto bubble, and shows how you can still profit safely.
Will Wealth Inequality Kill the Bull Market?
Yesterday, Bill considered if wealth inequality really was the “defining challenge of our time.” But here’s another side to the question. Could wealth inequality be the undoing of today’s bull market?
In the mailbag, a question. Will Oprah be president?
I beg your pardon! Oprah?! How insane do they think we are? What insane world do we live in? As if this loudmouth has any clue what the average person has to deal with on a day-to-day basis. Only the Hollywood guns could come up with such a bright thought. This entire country lives 24/7 in Disneyland. And we wonder why everything is going down the toilet.
– Peter S.
Heaven help us if Oprah became president! The stock market would surely tank with every social program a person can think of. And of course, the evil white industrious male would need to be taxed heavily for being so white and male.
– Gene S.
I have been watching with fascination the musings of your media over the prospective candidates for your next presidential election. Not being in a position to criticize (we have a prime minister who is so insipid, he needs starch in his shirts just to sit up straight), I find confirmation of your oft-stated views on the decline of the American empire. (Just as an aside, the U.S. has to be the poorest example of an empire when you consider the territories it has outside the fifty states.)
In any event, with the quality of the candidature, it can’t be long before you have an Incitatus being appointed consul by your own version of Emperor Gaius.
– Dene W.
I didn’t vote for Trump. Not interested in him or Oprah.
– Katharine P.
Meanwhile, conversation turns back to Trump…
I caddie in the summer, and drive a taxi in the wintertime. I did a stint in the United States Marine Corps in my youth. I consider myself a patriot. I was a HUGE supporter of Donald Trump. But now, it looks as if he’s just another wicked, two-faced RINO. It looks as if he’s going to cave on Deferred Action for Childhood Arrivals. And no wall. So even though it’s sometimes a little painful to read what you write, I am most grateful for your work.
– Chris M.
Our president is a joke, a dirty joke on the people of our country. Some criticized President Obama and their bigotry was fully exposed. They never stopped. To them, he did nothing for the people. If so, what took all year for this president to undo?
– Chris G.
You say you were “punched in the face by a dear reader”… But you still continue your ignorant and stupid arguments about President Trump. All with the excuse that you always laughed at others! Is it so hard for you to understand that making money (and wasting readers’ time and money) is NOT appreciated by intelligent readers?
– Henry A.
I believe that most of your detractors are well-meaning, but miss the point. You are a bipartisan – or rather, a nonpartisan – cynic. I’m a longtime reader (who awaits your next book with anticipation). Your cynicism is well founded and backed by ample substantiation. The point you made today concerning public figures rising to high-level positions all being either scoundrels or frauds (usually, some combination of both) was poignant, but true.
Certainly our president is a rascal, but he is the most entertaining one to date. In fact, I think his best qualities are that he is neither a career politician nor politically correct. If he’s not draining the Swamp, he’s at least annoying it to no end! It’s a start anyway.
While I share your concerns about his Deep State appointments and military/industrial complex affinities, I remain hopeful that his intent is still to turn the tables on them. In the meantime, I can still enjoy the show as amplified by your commentary.
– Jeff L.
IN CASE YOU MISSED IT…
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