Tax reform explained: How it helps our culture, our families, our economics


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TOM LAMPRECHT:  Harry, it was last Wednesday President Donald Trump said the American worker received a great Christmas present. He was talking about the new tax bill legislation that was passed. Analysis says legislation could increase the national GDP by 1.7 percent and wages could see a bump by 1.5 percent.

THE TAX REFORM GOAL

DR. REEDER: The Republicans in the Senate rise or fall with this and the Democrats now are on record as having voted against, en masse, a tax credit and tax simplification plan. Certainly, that will become fodder in the next election if the tax plan succeeds – and it’s the kind of tax plan that you’ll start getting the feedback pretty quickly on it.

Let’s take a look at it, Tom. The original idea was to get the seven tax brackets down to three or five. That did not happen, yet they did lower rates in every single tax bracket, but they also took away deductions at the same time in an effort to simplify and the idea was some of these deductions that only the rich can take advantage of, either by being able to secure lawyers who are competent to do it and tax experts that they can take advantage of it so, in that sense, the deduction reductions were supposed to be middle class and lower class-friendly.

And the idea was to put it on a postcard – right now, the figure’s being used that over 90 percent will go to the postcard and the reason why is because the deductions available have been reduced in terms of these intricate deductions and they focused in on things like child adoption, marriage, that there are either tax credits or deductions associated with that.

HOW THIS HELPS CULTURE

Now whether it’ll be over 90 percent or not, as it’s being claimed, I don’t know. They’ve doubled the marriage benefit and they’ve doubled the child tax credit. Behind that, now from a Christian world and life view, of course, I applaud that because, A.), it is a step toward removing the penalties on those who are married and, B.), it is a step toward supporting marriage, which is best for the next generation.

Yes, a single parent is going to have a challenge in this, but there are other remedies available to the single parent. However, those who are cohabitating without marriage and have children, this will be quite a hit on their pocketbook which, again, encourages marriage, which is, I believe, a good thing in our society.

Properly developed and prepared marriages is a good thing and so a tax system that encourages family structure, I believe, is good and this one does, undoubtedly, encourage the family structure and so I would strongly encourage that.

TOM LAMPRECHT: Yeah, Harry, it is interesting because, for years and years, we heard the complaint that there was a marriage penalty and many critics of this new tax plan are coming out and saying, “Whoa, this is not fair. There’s now a penalty against people that are cohabitating that are not married.” Yet, at the same time, we see the family structure and, in certain demographics, that there’s an absentee of fatherhood and there’s been correlations drawn together that that equals troubled young men that are growing up in our society.

DR. REEDER: Exactly. Let me navigate back to my statement. I’m grateful it encourages the family structures – no longer a penalty, there’s now an incentive to marriage, which is better for the next generation. It has been proven that children need fathers and mothers in their life and they need the stability of a family, not two people cohabitating while it is convenient and then they walk apart and now kids don’t have a family structure to be raised in or people that it costs them to be married.

HOW THIS HELPS ECONOMICALLY

When you get to the economic side, it is estimated that this will, “cost the government $1.5 trillion” in the final analysis of revenue, but the government says, in the dynamic scoring, it would actually end up in a positive. If you have a 1.8 increase in the GDP, revenue side of that will more than make up for the $1.5 trillion loss.

We’ve already seen immediately upon the passage of this, dozens of companies – I mean, big name companies – gave $1,000.00 bonuses to their workers, made certain promises and, in some cases, in the process of building new corporate structures that they were going to build overseas and, in some cases, begin the process of moving them back. They also created an incentive for the offshore money to be brought back, which is in the trillions and trillions of dollars.

They also, because of the efforts of a couple senators such as Senator Langford and Senator Lee and Senator Rubio and others, they were able to restore the adoption assistance which, again, is family friendly. Kids that don’t have families, now there is help for those who go through the enormous price tag, which is anywhere from $20,000.00 to $50,000.00 to get through all the regulations for adoption.

Their point is, “We can’t remove the regulations because we want to make sure kids get in good homes, but we can give some support – some tax relief – to those who are going through that process,” and that was put back in place as well.

Another thing that was done, Tom, is that they doubled the amount before any tax is placed upon estate inheritance. I abhor the “death tax.” I think you’ve already taxed that money once and I don’t think it’s fair to tax it again. I think it’s the government just saying, “We’ve got the power to do it and we’re going to get you twice.”

WHO TAX REFORM HURTS

There’s a basic approval of the tax reform, but when you go and ask people do they approve it on an individual basis, there is a negative response. It’s almost 2 out of every 3 say, “I don’t like the tax package because it hurts me.”

Well, it does hurt people. No. 1, fewer people are getting married and it does hurt them. Almost everybody loses some pet deduction that they had worked into their system. What they don’t take the time to look at is, “Yes, you can go to this simplified system now. Yes, you lost some deductions, but your rates are being lowered and these valid credits are being put into place.” With the rates being lowered and these deductions and credits in place, what happens now is, actually, you don’t need to go to this intricate system of deductions. And, by the way, you don’t even need to hire as many tax lawyers and accountants as you used to, either.

WHAT ABOUT THE SPENDING?

From a Christian world and life view, I’m always for a limited government. People say, “Well, they didn’t reduce spending.” Tom, it has proven out under President Reagan, a Republican, and President Kennedy, a Democrat, when they went through this tax restructuring and reform, there was a drastic impact on the income of the government because of the increased activity economically.

There is one view that, “The government deserves the money and we’ll see what we want to give you back. And, by the way, there’s a pie and we need to cut it up and the government ought to get the biggest cut so that it can redistribute wealth.”

The other group says, “No, let’s let people redistribute wealth. The government has certain functions, so let’s tax to get those functions done. Otherwise, let’s let people keep their own money.” And, when you do, not only do we divide up the pie, the people will actually make more pies.

WHY THIS IS A STEP FORWARD

Therefore, from a Christian world and life view, I support it because it’s a step forward – not complete, by any means – a step forward on limited government affirming that people own their money, not the government, a step forward in supporting the family structure, a step forward in affirming something we desperately need and that is the adoption ministry that our government ought to have in place, a step forward of simplification so that people can understand what’s going on at least a little bit more clearly – more or less can understand – and it is a step forward toward creation of wealth instead of redistribution of wealth.

For those reasons, I would support what is being done. What I am hoping is it’s going to be such a significant step forward that other things that need to be done will yet be done and somehow, out there, there can be an effort to deal with the issue of budgeting and, dare I open up a box – and I am at the age that it’s okay for me to open this box – the “entitlement pieces.”

And I don’t just see them as entitlement because people paid into Social Security, but I believe it would be fair to put a reform in that raises the age of receiving it commensurate with the rising age of life expectancy. It was established back in the ‘30s and modified once since then in light of life expectancy at one age and that has clearly risen and so I think it would be appropriate that people would begin to collect those things at a later date.

If nothing else, at least that would be a step forward in reigning in the spending area. Now, speaking of the spending area, something that’s going to affect the spending area, Tom, is the President’s Security Speech and let’s take a look at that tomorrow.

Dr. Harry L. Reeder III is the Senior Pastor of Briarwood Presbyterian Church in Birmingham.

This podcast was transcribed by Jessica Havin. Jessica is editorial assistant for Yellowhammer News. Jessica has transcribed some of the top podcasts in the country and her work has been featured in a New York Times Bestseller.

12 hours ago

VIDEO: Prisons could be built with COVID-19 funds, Shelby endorses Katie Britt for Senate, Brooks battles with Swalwell as a new poll shows big lead and more on Alabama Politics This Week …

Radio talk show host Dale Jackson and political consultant Mecca Musick take you through Alabama’s biggest political stories, including:

— Will Alabama really use COVID-19 relief funds to build prisons?

— Does Katie Britt’s entering of the U.S. Senate race shake things up, or has U.S. Rep. Mo Brooks (R-Huntsville) already won this race?

— Can U.S. Sen. Joe Manchin (D-WV) keep the more radical members of the Democratic Party at bay?

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Jackson and Musick are joined by former U.S. Attorney Jay Town to discuss the issues facing the state of Alabama this week.

Jackson closes the show with a “Parting Shot” directed at those who want to use the illegally acquired tax returns of the uber-wealthy to push for higher taxes. He argues the released returns show that we should implement a flat tax and do away with all deductions.

Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 AM weekdays on WVNN and on Talk 99.5 from 10AM to noon.

15 hours ago

Auburn’s David Housel tackles more than sports in ‘From the Backbooth at Chappy’s’

When David Housel retired from Auburn University in 2006, after a legendary career as athletics director for the Tigers, it wasn’t long before his wife urged him to get busy again – and a deli on Glenn Avenue in Auburn was the beneficiary.

“Susan wanted me to do something to get out of the house,” Housel recalls. “I started going to Chappy’s to drink coffee, read the paper. Pretty soon, Kenny Howard would meet me there, and it just kind of grew from there.”

In short order, friends of Housel began to gather, first a few one day a week and then, just prior to the pandemic, 12-16 people nearly every day of the week.

They meet at Chappy’s, where a plaque commemorates Housel’s booth, and they talk – about sports, of course, but about pretty much anything that’s on their minds.

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Housel began to write essays about those mornings, posting them to Facebook. He’s now compiled more than 100 of those pieces into a new book, “From the Backbooth at Chappy’s: Stories of the South: Football, Politics, Religion, and More.” It’s officially released next week at a series of book signings at Chappy’s in the Auburn area from 10 a.m.-2 p.m. each day: Tuesday in Auburn, Wednesday in Montgomery and Thursday in Prattville.

“Consider this Housel unleashed,” the author says. “Most of the stuff I’ve written in my life has been about Auburn on an Auburn platform. Even after I retired, I was a representative of Auburn, even though I wasn’t working there. This is not an Auburn book. It’s about football, politics, religion and more.”

“From the Backbooth at Chappy’s,” with a foreword by Auburn graduate and acclaimed journalist Rheta Grimsley Johnson, evolved as Housel’s morning gatherings at Chappy’s evolved, though he began writing the essays fairly early in the process.

“When something is in your mind, in your heart, in your head, if you’re a writer, it just has to come out, and it just comes through your fingers,” Housel says. “Turns out people like to read it, so I got the Facebook page. I shared thoughts and essays and that kind of thing. It was not a planned thing.”

When COVID-19 came along, Housel decided to listen to a few folks who told him his musings would make a good book.

“I had been thinking a lot about it, and it was time to do it,” Housel says.

Housel has written six other books. Most have to do with Auburn sports history, but one, “From the Desk of David Housel,” is similar to “From the Backbooth at Chappy’s.”

“That one was primarily sports, but it had some other things in it,” Housel says. “This one is about the other stuff, but it has some sports in it.”

Though the three topics in his book’s title – football, politics and religion  – are often the subjects people are warned not to bring up if they want to keep the peace, Housel and his friends don’t shy away from any of them. Housel especially gravitates toward religious topics.

“I like the ones that I hope make people think,” he says of his essays. “The good Lord gave us a mind, and we’re supposed to use it. Too few people who call themselves Christians do what the Lord said and use their minds. … Faith has got to be built not on challenging God but questioning God. I think God likes that, because it shows we’re engaged and that we care.”

Now that the pandemic is ending, the Backbooth at Chappy’s events are slowly but surely returning to normal. On Mondays, Housel eats two eggs scrambled, lean bacon and a helium biscuit; on Tuesdays maybe a parfait with granola; on Wednesdays, it’s blueberry pancakes, and Fridays a waffle.

What remains constant is the conversation. And the writing.

“I’m still writing the Backbooth, and since the first of the year, I’ve written a couple I think are book-worthy,” Housel says. “I started out doing maybe one a week, but I’m old enough that I don’t have to meet a self-imposed deadline. When the spirit moves me, I write.”

(Courtesy of Alabama NewsCenter)

17 hours ago

State Rep. Pringle pushes to ban critical race theory in public schools — ‘Woke culture indoctrination,’ ‘Needs to be stopped in its tracks’

Last week, Florida’s Board of Education banned so-called “critical race theory” from its public schools, and it is a move State Rep. Chris Pringle (R-Mobile) hopes to follow in Alabama.

Critical race theory, a belief that racism is ingrained in some of America’s sacred institutions, is widely panned by critics because it distorts and weaponizes history for political gain.

Friday, Pringle discussed his prefiled bill for the Alabama Legislature’s 2022 regular session to prohibit critical race theory from being taught in Alabama’s public schools.

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“It’s simply a bill that says in public education, you can’t teach or indoctrinate our children with critical race theory,” he said. “People are waking up all around the nation to how bad this stuff is. I mean, this is woke cancel culture gone completely amuck. They want to completely disregard our 14th and 15th Amendment rights, the Voting Rights Act, the Civil Rights Act. If you don’t agree with them — here’s what’s crazy: They want to send you to a reeducation camp. Think about that, a reeducation camp. Don’t they do that in China, Russia and North Korea?  That’s how bad this stuff is. Either you agree with them or you have to be sent off to a reeducation camp.”

“This is just indoctrination — the woke culture indoctrination of our children,” Pringle continued. “That’s all it is and it needs to be stopped in its tracks. I mean, our children need to learn history and we ought to open a frank discussion about history — the good, the bad. But this is not about good or bad. This is teaching our children that our nation is a bad nation, is an evil nation and is not the great country that we live in. We are the safest, freest people in the world and that’s what our children need to learn.”

“Do we have problems? Yeah,” he added. “Have we done bad things? Yeah. But we’re still the greatest nation in the history of the world.”

According to the Mobile County Republican lawmaker, the response to the effort thus far has been positive and supportive.

@Jeff_Poor is a graduate of Auburn University and the University of South Alabama, the editor of Breitbart TV, a columnist for Mobile’s Lagniappe Weekly, and host of Mobile’s “The Jeff Poor Show” from 9 a.m.-12 p.m. on FM Talk 106.5.

20 hours ago

Why Sylacauga marble is known around the world

If you’ve ever visited the Lincoln Memorial in Washington D.C. and stared up at the translucent marble ceiling, you’ve witnessed a piece of Alabama history. The ceiling is made of white marble mined in Talladega County’s Sylacauga (appropriately known as the Marble City).

In addition to lending its natural treasure to some of the nation’s most notable buildings, Sylacauga also holds the title for having the longest deposit of marble in the world. The bed of stone runs 32 miles long, a mile and a half wide, and more than 600 feet deep. The marble found in this quarry is especially desirable for two key characteristics: its purity and its durability. When paired together, these distinct qualities make Alabama marble some of the most desired in the world for large-scale buildings and monuments, as well as homes and sculptures.

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The History of Alabama Marble

sylacauga marble

The Sylacauga Quarry (Sylacauga Marble Festival/Facebook)

Marble is formed when limestone is subjected to extreme pressure and heat. In Sylacauga, the conditions are perfect for the formation of metamorphic marble. Sylacauga’s massive deposit was first discovered by Native Americans, but it wasn’t quarried until 1834, 20 years after army surgeon Dr. Edward Gantt stumbled upon the vein while passing through with General Andrew Jackson’s army.

In the years that followed Gantt’s discovery, Sylacauga’s marble business thrived. More quarries popped up, mining the marble for everything from funerary monuments to building projects to sculptures. By the 1960s, the use of the quarried marble shifted toward the utilitarian. Rather than being mined in huge chunks for building material, the marble was being ground down for use in products like cosmetics, diapers, magazine paper, fertilizer, fiberglass, toothpaste, and chewing gum. In 1969, marble was named Alabama’s state rock.

A Timeless Treasure

Sylacauga Quarry (Sylacauga Marble Festival/Facebook)

Today the charge for Alabama marble is being led by the Swindal family, who own Alabama Marble Mineral & Mining Co. (AM3). AM3’s 50-acre quarry in Sylacauga is the world’s only supplier and leading distributor of Alabama marble. Owner Roy Swindal’s goal is to reintroduce the world to Alabama marble, once again marketing it as a prized material for both commercial and consumer construction. According to the Alabama Department of Archives and History, around 30 million tons of marble have been pulled from the ground in Sylacauga since 1900. The Swindals hope to add to that number by continuing and improving upon the state’s tradition for many years to come.

Marble Mania

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Sculptor Enzo Torcoletti at the Sylacauga Marble Festival (Sylacauga Marble Festival/Facebook)

It’s only fitting that a town built on marble pay tribute to the stone that brought its success. For the past 13 years, the city has celebrated its marble mining heritage with the 12-day Magic of Marble Festival. The festival, typically held in April, features several activities and events that are all free and fun for the whole family. Festival participants can take a tour of operational quarries and visit the Gantts/IMERYS Observation Point that overlooks the town’s historic first quarry. The creative side of marble is put on display at Blue Bell Park, where 25 sculptors create original pieces made entirely of marble. On the final day of the festival, the finished pieces are displayed and sold at nearby B.B. Comer Library. Other activities include a 5K run and a scavenger hunt.

If you can’t wait for next year’s festival and you want to see Alabama’s famous white marble in action now, there are several locations around the state to see it put to good use. In Birmingham, try the John Hand Building, Wells Fargo headquarters, City Federal building, or the Chamber of Commerce. If you’re in Montgomery, don’t miss the “Head of Christ” sculpture at the Alabama Department of Archives and History. It was created by Italian sculptor Giuseppe Moretti, who also happens to be the artist behind Birmingham’s Vulcan.

(Courtesy of SoulGrown)

20 hours ago

The economics of paying ransom

The cyberattack on the Colonial Pipeline by the hacker group DarkSide disrupted gasoline supplies across the Southeast. The company caused a stir by paying a 75 Bitcoin ransom to DarkSide. America historically has been opposed to paying evildoers, as reflected in the slogan, “Millions for defense, but not one cent in tribute,” and President Jefferson sending the Navy and Marines to fight the Barbary Pirates.

Ransomware raises many economic issues. A first question is, do hackers ever give the data back if paid? DarkSide provided Colonial Pipeline a key to decrypt their data. According to Proofpoint, this is the norm: 70% of ransom payers got their data back, 20% never got their data back and 10% received a second ransom demand.

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From an economic perspective, this is not surprising. About two dozen groups, identifying themselves by name and known to insurance companies, carry out most of the sophisticated attacks. Insurers would never recommend payment in the future to a group which has reneged. The hackers must deliver as promised to make money.

Some have suggested making payment of ransom for cyberattacks illegal. If no one ever paid ransom, the hackers could not make money. Refusing to pay ransom though faces two significant economic challenges.

The first is time consistency. Kidnapping illustrates this concept. Before an event, the incentive exists to say, “We will never pay ransom.” If the bad guys believe this, they will never invest the time, effort and expense to stage a kidnapping. Once they hold hostages, however, our incentive changes; negotiating just this one time now makes sense. Our policy to never pay ransom is not credible.

Collective action poses the second challenge. Businesses collectively have an interest in not rewarding cybercrime, yet individual businesses suffer these attacks. A business which does not pay ransom benefits other businesses, creating the challenge. Why should Continental Pipeline suffer losses to make other businesses less likely to be attacked?

Why do businesses pay ransom? Reports mention several factors. A business may face a closure of unknown length and cost. Customers’ personal information will be sold if ransom is not paid, leading to fines and bad publicity. And the hackers might sell proprietary information to competitors.

Good economists know better than to second guess business managers’ decisions. Decisions to pay ransom often involve the business’ executives, its insurance carrier and tech security experts. They know the options and likely costs and should make a good decision, despite the pressure of a crisis.

Insurance companies and government regulations reduce organizations’ vulnerability to hackers, which is good. But what about channeling President Jefferson and going after the hackers? Most of the hacker groups operate in Russia, which provides Safe Haven as long as the hackers do not target Russian companies. Some law enforcement options may exist. Federal prosecutors apparently recovered most of the Bitcoins paid to DarkSide.

Crime is a very costly way to transfer wealth. Stolen merchandise typically sells for one-third (or less) of market value. A criminal might have to steal thousands in property to net $1,000. Ransomware appears much more wasteful than traditional theft. Consider just the value of the time Americans spent searching for gas during the disruption. Remember then that the ransom was about $4.4 million.

Cybercrime makes us poorer. The hackers and defenders at tech security companies are highly skilled computer programmers. But instead of making new apps or games, they are hacking or defending existing computer systems. Add to this the service disruption during cyberattacks, the reduced use of technology for fear of being hacked and the time spent on security training. The costs may be $1 trillion annually, or one percent of global GDP.

We must guard here against comparing the real world to an imagined utopia. We cannot costlessly protect our property from thieves or our computers from malware, or make people no longer willing to steal from others. Economics teaches that there are no perfect solutions in life, only tradeoffs. Vigilance, antivirus programs and backup are the tradeoffs we face with cybercrime.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.