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US economic growth was 2.8% in the second quarter 2024 with broad based growth in consumer spending, business investment and government infrastructure spending, Commerce Department shows. Inflation and consumer prices went down from 3.4% in the first quarter 2024 to 2.6%. This is a good sign for the economy's resilience. Yet housing costs are high and families are struggling with high cost of rentals. This applies to moderate and low income families who are struggling. Consumers have kept on spending because unemployment is low  buyers face lower inflation, and wage growth is higher than inflation. For the second quarter of 2024 after tax income adjusted for inflation was 1%.

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Higher oil prices help the U.S. oil industry which is on track to be larger than the oil industry of Russia, now that prices exceed $70 a barrel. Yet another $10 or $15 increase in oil prices could lead to reducing economic growth. Efforts by OPEC to cut production and coordination with Russia has taken most of the excess supply out of the global oil markets, and the economic growth in U.S. and Europe has increased demand.

Analysts say the higher oil prices will negate the benefits from tax cuts for low income families.

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Wealth and people migration in the US in 2020 is shown in this WSJ report. Latest IRS data released for 2020 shows migration of taxpayers and adjusted gross income from states in the midwest, on the eastern and western seaboard to states in the southern US and to mountain states in the west. Some of this is a result of the pandemic lockdowns and the shift to remote work which means that the trend for migration will continue for 2021 and 2022. The shift in income was as follows-Florida  23.7 billion, Texas $6.3 billion, Arizona $4.8 billion, North Carolina $3.8 billion, South Carolina $3.6 billion, Tennessee $2.6 billion, Nevada $2.6 billion, Colorado $2.3 billion, Idaho $2.1 billion, Utah $1.3 billion.  The biggest losses came from New York -$19.5 billion, California -$17.8 billion, Illinois -$8.5 billion, Masachusetts -$2.6 billion, New Jersey -$2.3 billion, Maryland -$1.9 billion, Ohio -$1.4 billion, Minnesota -$1.2 billion, Pennsylvania -$1.2 billion, Virginia -$1.1 billion. WSJ says the tax burdens in the southern and mountain states in the west are low. In four states there is no state tax- Florida, Texas, Tennessee and Nevada. By comparison says WSJ states losing wealth and population have high state taxes for property and income. Schools, quality of life and cost of living are also major considerations, with remote work opening up the opportunities to seek a better life in other states which offer more space for working at home.   ...

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In the third and final debate of the 2016 U.S. presidential election Hillary Clinton shows she has mastered the techniques used by Trump to use short jabs and comments to unsettle her opponent, yet doing it in a meaningful way to make a point about how she is better qualified and her program helps the middle and working class.

On taxes she added to her plan about not increasing taxes for people making more than $250,000, with the comment that it would increase her and Trump's taxes provided she said Trump hasn't "figured out how to get out of it." It also was meant to draw Trump's response about not revealing his tax returns and plans to give hugely disproportionate tax cuts to higher income people. Trump called her "a nasty women," in response, which was a point cited by media reports as a negative for women voters.

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Hillary Clinton attacks Trump's policies in an address in Warren, Michigan, saying this was another version of failed trickle down economics. She called Trump's idea of taxing pass through entities such as small business reporting business income on individual tax returns at 15%, as a "Trump loophole." On trade policy Hillary Clinton said she would oppose the TPP or Trans- Pacific Partnership Trade Agreement that president Obama has supported. She put it flatly- " I oppose it now. I'll oppose it after the election, and I'll oppose it as president." And pointed out that too many companies have moved jobs overseas and "moved operations overseas and sold back into the U.S." after pushing for trade deals. The answer she said 'is not to rant and rave- or to cut us off from the world," in reference to protectionist policies Trump has supported. 

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The two front runners among Democrats in the campaign for President in the U.S. are building their lead on the basis of programs to reduce inequality and build the social fabric. Bernie Sanders and Elizabeth Warren support a program of Medicare For All. This program is a single payer program run by the government so that medical costs can be cut by the government directly negotiating cuts, which would reduce some of the cost.The WSJ looks at the ways this can be financed at a cost of between $11 trillion over a decade. Programs of less extensive coverage  in Medicare for All excluding undocumented workers and having individuals share some costs would cost this much, according to some experts.The gap would be financed by taxes such as that on Medicare currently. Sanders additional tax premium would be 7.5% paid by employers and 4% by employees. About $1 trillion is generated by each percentage point of taxes over a decade says CBO, so that a combined 11.5%  tax would cover Medicare for All. Alternatives or some combination would include this with taxes on the wealthy. Tax hikes on wealth, income and financial transactions would generate $11 trillion over a decade, according to the Committee for a Responsible Budget. Currently a majority favors a Medicare for All plan, and this support could grow as people understand that it would be progressive and reduce the burden on the middle class by shifting some of the burden to the wealthier in society in today's economy, where much of the increase in wealth over the last 3 decades has gone to upper income people. Much more so in the U.S. than in Europe creating a tear in the social fabric and disaffection with Democrats, who in earlier administrations from Clinton to Obama failed to maintain the gains made under FDR, Truman and Kennedy. This has led to a Republican administration under president Trump that won over disaffected Democrats but hope to merley to maintain the status quo. Warren is trying to change this with bold social programs that fit today's needs and circumstances. ...

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When you compare the US to the European Union or India one can see how America is failing its people in offering basic public services that other countries do routinely. Jennifer Pahlka is the author of- Recoding America: How America is Failing in the Digital Age and How We Can Do Better. Pahlka points out the problem in the US where private companies obstruct the delivery of basic services that the government can provide, just for their own profit. They throw in a carrot so that there is an excuse for not doing anything about this. For example tax preparation companies tell the IRS not to develop a simple tool available to all taxpayers to file their own taxes easily which is already filled with basic details. The carrot so that no one complains is that they will offer free tax preparation services to low income people. In the EU and many other countries tax preparation is done using tools offered by the tax agencies for easy preparation. In India it was possible to make it through the pandemic for large parts of a population of 1.4 billion because checks could be deposited directly into people's bank accounts. Digitization is used in India to make certain there is delivery of public services directly to each person. ...

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DJT pulling back student lending as a way to get universities and colleges to reduce prices. This is the first time any administration has done this. Universities have increased prices to the point where costs for tution are no longer affordable by a majority of the American people, and are now beyond the reach of the middle class or the working class of the Nation. Universities through management not sensitive to the Nation's needs and the needs of the American people, have kept raising tution to the point that it can cost more than the average salary in the US of $66,000 and more than 1.5 times the after tax income of $50,000 just to pay tution for an undergraduate degree- simply outrageous that educational institutions had forgotten their mission.

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For the approaching US midterm elections president Biden seeks to draw a sharp contrast with Republican Senator Rick Scott's Plan which he says would worsen inflation and increase taxes on working class families. Mr. Scott's plan is for sunset on all federal legislation and president Biden says this would include Medicare and Social Security. Mr. Scott also wants all Americans to pay some income tax to have skin in the game. At this time about half of all Americans pay no taxes says Mr. Scott. Former US president Trump continues to lead the Republican party in 2022  yet he faces a very different Democratic party under president Biden. Mr. Biden's focus is on his $2 trillion plan for Workers and Families, rebuilding American manufacturing and renewing supply chains, unlike Hillary Clinton whose lacked such a focus. Leading to Mr. Trump's appeal with working class families and disdain for traditional Republican policies that secured him the presidency in 2018 by defeating Hillary Clinton. The changes with president Biden's focus on workers and families are happening also in the European Union. Scholz and the Greens in Germany, Macron in France with potentially Melenchon as prime minister, and similar changes in Denmark and other EU countries suggest that there is a renewed focus on infrastructure, rebuilding manufacturing and supply chain renewal, rebuilding incomes and lives of workers and families, in Europe and the US. ...

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The corporate income tax rate for American companies is 35%. But many American corporations do not pay 35%. G.E. is likely to pay no federal income tax in 2010. G.E. Capital lost billions during the financial crisis and it is using a tax loss carry forward. It is also using a tax break called the active financing exception which allows U.S. companies to avoid taxes on overseas profits if those profits are made by actively financing some activity or deal, a tax loophole created in 1997 that G.E. lobbies hard to keep. For G.E. the worldwide tax burden was 7.4%. Google also pays a low tax rate. Robert Willens, a corporate tax expert, says the typical multinational corporation pays about half the stated tax rate.

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The Bush tax plan simplifies the tax code and cuts the highest rate from the current 39.6% to 28%. It reduces the corporate tax rate to 20% and favors business investment. The tax on income earned by companies overseas is gradually phased out in the plan. It is designed to jumpstart growth. Jeb Bush balances his plan by creating some element of fairness by doubling the standard deduction, expanding earned income credit, limiting itemized deductions to 2%, and ending loopholes for hedge funds such as "carried interest." Jeb Bush has lamented the loss of income and economic mobility for the working class and lower middle class in the U.S., more than most of the Republican candidates, and this tax plan takes this into account, by betting that working class and lower income people benefit most from higher growth, better job mobility, and wage growth, as well as an element of fairness in taxes.

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 State tax shortfalls in the US were expected as consumer purchases dropped sharply in 2020 from the impact of coronavirus lockdowns. Yet this has not happened as total taxes for all states have remained essentially flat, only down less than 1% in 2020 over 2019. Widespread intervention by the US government helped households, businesses and financial markets, helping avoid the pessimistic projections. Stable employment for the more affluent households with steady jobs working from home brought in stronger tax revenues. The situation improved for most states in the second half of 2020, with roughly half the states taking in more revenue in 2020 than in 2019.  Idaho and Utah which attracted workers from the West Coast, had some of the highest tax revenue increases. The pandemic spared the high income jobs which generate most of the revenue helping to create surpluses in Colorado, Vermont, Georgia, Maine, California, Maryland and Virginia. In California a surge in initial public offerings in 2020 helped total tax revenue increase by 2.5%. Even a state like Illinois had personal tax collections higher in 2020 than 2019. This sets aside some of the fears that the pandemic caused about loss of jobs in state and local governments. With assistance from the Biden administration to state and local governments in the  $1.9 trillion aid package for 2021 this job loss could be restored to aid economic recovery. ...

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U.S. states face their biggest cash crisis since the Great Depression as a result of rapidly declining tax revenues with a state budget shortfall of $434 billion, says this report in the WSJ. This is larger than the 2019 K-12 education budget for every state combined, or more than twice the amount spent that year on state roads and transportation infrastructure. Rainy day funds will be exhausted by the loss in tax revenues after the pandemic closures of business. Nevada, Louisiana, New Jersey and Florida are the worst hit states. The result will be cutbacks in the future and more pressure on the retirement benefits for police, firefighters, teachers, government workers. Over 60% of the revenues of states come from sales and income taxes to meet the general operating funds. Drops in consumer spending and large job losses from the pandemic affect these revenues. Local government workforces were cut by 1 million people. In Michigan 31,000 state workers were furloughed 2 days per pay period for 10 weeks, and others were laid off. Rainy day funds set up after the 2008 crisis are exhausted. Only federal funds are keeping states afloat with a lot of uncertainty about 2021. The state budget director in Michigan calculated that even if the state got rid of 12 state departments including education environment and treasury, all reserves would be gone, and there would still be $1 billion budget shortfall. The rainy day funds set up after 2008 crisis accumulated $50 billion in U.S. states which have helped somewhat, with federal funds helping tackle shortfalls. Yet 2021 looms with huge shortfalls and expected cutbacks across the U.S. ...

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The part of the tax law that limits state and property tax deductions to $10,000 and limits deduction of mortgage interest is likely to slow the rise of housing values in 2018. Much of the effect is psychological as the impact is felt on the East Coast, California, Midwest and the D.C. area. The median U.S. county will see a decline of 0.8%, and some counties in New York could see declines of 10%, according to Moody's analysis. The impact is greater for higher priced homes, and where incomes are higher with big mortgages and big tax bills.

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Krugman questions the Paul Ryan U.S. budget proposal on several grounds. He says the Ryan proposal depends on projections by the Heritage Foundation for its assumption that the tax cuts would generate higher revenues by creating a booming economy. The Heritage Foundation projection is for revenue increasing by $600 billon over the next 10 years as a result of tax cuts. Krugman cites a different view from the Congressional Budget Office estimate for the Ryan proposal, which shows assumed savings from spending cuts will go not to reduce the deficit but to pay for tax cuts, with bigger deficits in the next decade. He says the spending cuts excluding Social Security, Medicare and Medicaid- but including defense- go down from 12% of GDP in 2011 to 6% of GDP in 2022- meaning that cuts in public services will need to cut to the bone. The Medicare part of Ryan's proposal does not say how spending on medical care will be reduced. The voucher or premium support Ryan envisages is estimated by the Congressional Budget Office to cover only one third of the cost of insurance premiums for Medicare equivalent care by 2030. Krugman cites the Center on Budget and Policy Priorities, which says the Ryan proposal achieves two thirds of its $4 trillion in spending cuts over the next decade by cutting programs that primarily serve low-income Americans. ...

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The major provisions of the Republican House healthcare bill that passed by a vote of 217-213 are- 1. To help people buy insurance coverage the bill offers $2000 to $4000 a year, upto $14,000 a year in credits based mainly on age, reducing them for families making $150,000, individuals making $75,000. 2.  Under the Affordable Care Act insurers cannot charge older Americans more than 3 times for same coverage they offer to younger people, the new bill makes this 5 times. This would increase premiums for older Americans and reduce it for younger Americans. This is the most controversial part of the bill. Older Americans supported the Republican party in the presidential election. 3. The new bill ends Medicaid as an open ended entitlement and places this on a budget with cuts of $880 billion over 10 years. 4. To mollify conservative Republicans a provision allows state to opt out some provisions of the ACA that requires minimum benefits such as maternity care and emergency services. It retains coverage for pre-existing conditions to mollify moderate Republicans. The bill provides states with $138 billion over 10 years to subsidize premiums, provide coverage for pre-existing conditions, mental healthcare and drug addiction. 5. The bill removes the taxes imposed under the Affordable Care Act (ACA) on high income people of about $300 billion over 10 years by repealing a payroll tax increase and tax on investment income. This bill and the ACA offer 2 competing visions on healthcare, both bills passed only by a margin of 4-5 votes in the House. The ACA overlooked the impact on premiums causing discontent among middle income Americans. The new bill lets premiums rise for older Americans in order to keep premiums down for other Americans. This shows the many tradeoffs involved and choices being made, and the lack of a consensus on the issue of healthcare in the U.S., becoming a highly politicized issue instead of the way it is treated in western Europe.     ...

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Professors Cole and Ohanian of the University of Pennsylvania and UCLA, provide a new interpretation of FDR's economic policies during the period 1932-1934 and the period 1937-1941, based on their research. This suggests conclusions different from that of Obama advisor, Christina Romer, and Fed chairman, Bernanke about that period. Changes in economic policies under the Roosevelt administration that helped bring wages in line with productivity, reduced strikes, and gradual elimination of the undistributed profits tax, improved incentives for business investment during 1938-1939. Cole and Ohanian, say that by 1941, before the U.S. entered the war, close to half of the increase in nonmilitary hours worked in the U.S. between 1939 and the peak of the war, had already been achieved. And this was primarily the result of the changes in FDR's policies in 1938. They say a similiar opportunity is presented by the proposals of the Bowles-Simpson commission on deficit reduction, by lowering the corporate income tax through simplification of the tax code and reducing or eliminating most tax expenditures. Improving the incentives for business to hire and invest through this and other steps is likely to do more for the economy than the steps tried so far since 2009....

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Americans Save Early and set aside for savings 10% of your pre-tax income, is the advice to ensure a safe and healthy savings retirement. This is absolutely critical. What the government can do is to ensure that incomes keep uo with inflation with fair wages in industry. It also can and should protect Americans from unexpected medical costs by ensuring that all Americans are covered by health care and for catastrophic situations. Then it is the task of Americans to build a culture of careful saving that their ancestors had and considered a essential part of virtue. For this to help build savings for retirement the government and the Federal Reserve together- as Biden and Powell have shown one with capital investments to build a strong economy and the other by protecting savings and cost of living action- must ensure that no financial crises take interest rates to zero or 1-2%. At interest rates of 5-6% for returns this helps build savings for retirement. For this to happen banks have to go back to their traditional work in the economy and no speculation risk, and Silicon Valley go back to inventing and not a culture of capturing capital allocation in capital markets and paying little in taxes. A new culture would put government in its right place to ensure that it plays a significant role in building manufacturing and science and technology in the US as president Biden has done through government investing in infrastructure and renewable energy, chips and science, and in education, healthcare.  ...

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US president Biden proposes to reduce the US deficit by $2 trillion by increasing taxes on American households worth more than $100 million that would apply to their earned income, and their unrealized gains on liquid assets like stocks. Biden also plans quadrupling the tax on stock buybacks by companies, a tax approved in the Inflation Reduction Act of 2021. The deficit in 2023 will be about $1.4 trillion and rise to about $2 trillion, so that Biden's plan is to practically eliminate the  large deficit if the Republicans come on board. Republicans prefer cuts in spending. US companies have engaged in a dramatic increase in stock buybacks in recent years leading to calls for increasing the tax on stock buybacks. Biden says even high income households will not see an increase in their taxes, only the wealthiest households with over $100 million who have benefited vastly through the Reagan type policies of the last two decades. These households with over $100 million in assets will not be affected in the same way as students, workers, and middle income households are affected in shouldering a large part of the burden of these Reagan type policies that did not adequately fund education, healthcare, and manufacturing in communities across America. This was a period when Democrats in Congress awed by Reagan type policies failed to vigorously oppose policy that increased the US deficit and burden on households for health costs by not allowing Medicare to negotiate prices with pharmaceutical companies. A senior AARP official says that when we talk about the Biden Inflation Reduction Act of 2021 the key component is the Medicare price negotiation with companies that is now law. Why Republicans and Democrats before Mr. Biden allowed such a gross distortion for two decades since 2001 that burdened ordinary  working Americans while neglecting American manufacturing, till Mr. Biden assumed the presidency, says much about the policies of the last two decades and how it has affected ordinary working families. Shriveling factory towns and creating much distress in these communities with these distortions that are a legacy of Reagan type laissez faire policies that government should do little. The result of these policies is that manufacturing is concentrated in only one country for the whole supply chain something that would never have happened with a thoughtful policy planning process. India and Vietnam are only today seen as alternatives for the supply chain in 2023 when policies were in place in these countries since 2014 for the supply chain to be distributed in a way that would be a win-win situation for all countries, avoiding the national security threats of today with overconcentration of manufacturing in China. This has not benefited China or the US because of the rancor and tension it has created. It was the fall of the Berlin Wall that created some of this awe for Reagan, when looking at it objectively it was nothing more than a course correction in Europe after the Hungarian revolution suppressed in 1956, Czech in 1968. It had little to do with what policies the US should pursue for workers and families, just as the war in Ukraine today remains another course correction in a different direction in Europe, and does not affect domestic policy in the US to build a better society for workers and families that Mr. Biden is doing. ...

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Japan's new LDP government will follow France and the U.S. by increasing the tax rate on top income tax brackets from 40% to 45%. Currently the top rate applies to those making above $200,00. The U.S. top rate of 40% applies at $450,000. It is hoped that this will make the increase in the sales tax to 10% more acceptable to the public and keep a sense of fairness in tax policies. Tax exemptions on estates will also be reduced with the figure at 30 million yen ($340,000) instead of 50 million yen. The U.S. has a figure of $5 million per individual. Tax increases on the wealthy will bring in about $2.3 billion a year. Japan is a more egalitarian society than the U.S. and is closer to Europe in this respect. Higher taxes are supported by the conservative LDP party compared to the Republican party's strong opposition to tax increases in the U.S. It is also a more homogenous society with fewer immigrants and closer to Europe in this respect than the U.S.

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Walmart sold three of its overseas store operations in the last 2 months, some at a loss as it decides to focus on e-commerce. Walmart exited operations in Japan keeping a 15% stake and selling the rest of the operation to other companies. Walmart sold Asda Group Ltd. in UK at a non-cash after tax loss of $2 billion and operations in Argentina at a non-cash aftertax loss of $1 billion. In 2018 Walmart sold its operations in Brazil at a loss.

It has been hard for Walmart to use the same strategies that it used in the U.S. to achieve dominant position by squeezing out inefficiencies in supply chain and getting the best price from suppliers.  In Japan its subsidiary Seiyu required infusion of $2 billion in 2008 without generating any income in recent years. 

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According to U.S. Senate investigators Apple recorded $26 billion, 65% of its income worldwide for 2012, in Ireland. Ireland Operations International is based in County Cork, Ireland. Ireland has about 4% of Apple's worldwide workforce. Laws in the European Union allow digital companies such as Apple and Google and other large companies to pay little in taxes through such arrangements. Apple CEO Cook says Apple is not using any tax gimmicks. Apple negotiated a low 2% tax rate with the Irish government. The Senate hearings in the U.S. and a meeting of EU leaders has raised concern about this practice being allowed at a time when much needed infrastructure investments are being shelved in the U.S. and Europe because of budget deficits. Spending cuts in education and in R&D hurt long term economic growth. Government statistics show the average Ireland tax rate on gross income of companies in 2010 was 6%. Ireland has a low corporate tax rate for companies of 12.5% which it retained after EU pressures to change the rate when the Irish bailout was provided. Ireland has 4000 Apple workers, and 600 American companies employ 100,000 Irish workers....

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The Committee for a Responsible Federal Budget is a non partisan nonprofit organization formed in 1981 by Connecticut Democrat Giamo and Oklahoma Senator Bellmon of the US Congress, senior members of House and Senate Budget Committtee. To educate the American public on issues related to the US Budgets, where money went and how it is spent. It's estimate for Kamala Harris plan for $6000 child tax credit is $10 billion a year. The existing $3600 a child tax credit in 2021 is estimated to cost $110 billion a year. Lyrarc estimate this will be offset by savings in Medicare of $36 billion a year from Medicare negotiation with Pharma as indicated by president Biden, and by $40 billion a year in billionaires paying 25% instead of 8.2% as a minimum tax per Biden, additional savings coming from very high income earners earning above $10 million. This would bring the cost of helping children in the first crucial years of life to below $44 billion a year. And making a huge investment in children at a time when everything has gone up in price from diapers, to baby food, to childcare and early childhood learning crucial for the future of America. We believe it is imperative to invest in children after the pandemic has cost 1 million lives and left for each dead person 8-9 persons in precarious situations financially. Educationally it has left children behind from missing crucial school years. These gaps will need to be filled and this is only one investment in the right place to correct this problem to prevent America from being handicapped forever by these problems and gaps in education in early years.  ...

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Paul Krugman points out that the Bush tax cuts if continued in the US for all income levels will cost $680 billion over the next decade. This estimate is from the Tax Policy Center.

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Former U.S. Treasury secretary Robert Rubin talks to Charlie Rose about the August 2 Debt Ceiling and Deficit legislation. He says there are two constructive things about the legislation. There are no serious cuts in 2011 and 2012, so there will be almost no loss in demand as spending cuts do not affect the immediate 18 month period. Former Treasury Secretary Summers also makes this point. And that the cuts include defense and non-defense. He favors the approach of the Bowles-Simpson Commission. On the overall situation Rubin points out the importance of getting a real public discussion going about what this means, what the consequences of decisions made now. Especially important for Rubin is public understanding of the importance of setting up a serious deficit reduction program that sets the date of implementation a couple of years into the future to give time to get back on track, and the need for increased revenues. A useful point Rubin makes is that the question of jobs and the question of getting into a sound position fiscally are really the same question. He cites his experience in 1993 when he helped President Clinton setup and implement a deficit reduction program- which had half spending cuts and half revenue increases. Bowles-Simpson Commission recommendations for closing loopholes for tax expenditures and Martin Feldstein's similiar proposal for limiting the deductions and exclusions to 2% of Adjusted Gross Income offer an option that creates revenues without any tax increases....