The Huessy Report
Memo for Our Montgomery County and Maryland Citizens, Prepared by Peter Huessy, President of Geo-Strategic Analysis of Potomac, Maryland
California Dreaming’
The Great Reset
The financial robber barons that meet in Davos Switzerland have a plan for you called the Great Reset. Here is a link from Hillsdale College that will provide you a view of this crazy idea---no dairy, no IC engines and no meat by 2035, ideas also endorsed by the MD State Legislature.. https://lp.hillsdale.edu/the-great-reset-cca/
Kamala Harris’s housing plan: $500 billion
Lee Ohanian writes about unanswered questions around US presidential candidate Kamala Harris’s promise to provide $25,000 in down-payment assistance to first-time homebuyers, and how it could cost taxpayers a veritable fortune. Though the details are still unclear, Ohanian writes, if the pledge uses existing federal definitions of what a first-time homebuyer is, eligibility for this money would total about 20 million households. He also says Harris’s pledge would only increase housing demand, driving costs up.
Read more here.
Marxism and Socialism
For a great course of study (free!) on Marxism and Socialism, here is a link for a Hillsdale gem: https://online.hillsdale.edu/landing/marxism-socialism-communism Watch it with your children and friends.
Taxes and Spending
Vice President Kamala Harris has not spoken publicly about her reported embrace of President Joe Biden’s $5 trillion tax plan, which includes the controversial measure of taxing the unrealized capital gains of the nation's wealthiest.
Her campaign confirmed to the Wall Street Journal on Wednesday that Harris supports the tax increases in the 2025 budget put forward in his recent budget proposal.
One of the most ambitious of the tax increases in Biden’s budget would tax the unrealized capital gains of those with wealth in excess of $100 million, which is a group that is small in number but significant in terms of overall investment. The plan, first outlined in 2023, would impose a 25% minimum tax on the total income of those with assets greater than $100 million.
Taxing the unrealized capital gains of billionaires is a popular proposal among the liberal-left flank of the Democratic Party, who see it as a way to make the tax code more progressive while also paying for other spending items and tax cuts for the middle class. Opponents see it as a complicated and impractical policy change that could hurt investment and economic growth.
The policy, if it actually became law, would mark a huge change from the current tax regime because gains would be taxed even if not realized. Under the existing tax code, billionaires and the very wealthy whose investments increase in value are taxed on that growth, known as capital gains, when those investments are finally sold off.
The political reality though is that even if Harris wins and Democrats are able to sweep the House and Senate, passing a tax on the unrealized capital gains of the wealthy would be exceedingly difficult, in part because not all Democrats are on board with such a move.
Alex Conant, a GOP strategist and partner at Firehouse Strategies, told the Washington Examiner he thinks that if a wealth tax were actually a popular policy, it would have been made into law years ago. He said there are economic reasons not to pursue such a big change in tax policy.
Additionally, he said it would “spark a tsunami of opposition,” even from some Democrats, and that the campaign is underestimating how many people would oppose such a change.
“It would create so many losers that it would make a lot of Democrats uncomfortable,” Conant said.
Another major Biden-budget tax item that Harris endorsed is raising the corporate tax rate to 28% from the 21% it was lowered to as part of the Trump tax cuts.
Former Speaker Gingrich noted that the last Democratic President that had a reasonable tax proposal was Clinton—who joined with Gingrich and cut the capital gains tax, adopted a child tax credit, increased the earned income tax credit, reduced taxes on retirement accounts and savings, while reforming welfare, cutting domestic discretionary spending, increasing defense spending by $50 billion a year while also balancing the budget.
What is the purpose of tax rates? From Hoover Institution, some wise words.
Next year promises to feature a contentious tax debate as Congress weighs the merits of extending the expiring provisions of the 2017 Tax Cuts and Jobs Act. Concerns over inequality will lead many in Congress to demand large tax increases on the wealthy—either through high income tax rates or novel wealth taxes. Senior Fellow Josh Rauh and Gregory Kearney, however, argue that much of today’s tax debate is based on myths:
Despite what you may hear, the narratives around income taxation and inequality pushed in the media are almost all completely wrong. Thanks to capitalism and free markets, far fewer people today live in poverty than they did fifty years ago, and inequality has not actually exploded. In the United States, the wealthy today pay the lion’s share of all taxes and substantial redistribution is already under way.
Rauh and Kearney point to work by economists Gerald Auten and David Splinter, who find that after controlling for income data issues and the amount of taxes paid, the share of income going to the top 1 percent has barely changed since 1960. David Splinter explained his findings in this 2021 Hoover Institution Policy Seminar. Similarly, contrary to the arguments of many who want to raise taxes, Rauh and Kearney show that the US tax code is already quite progressive: “When looking at federal taxes, for example, in 2021 the top 1 percent paid 45.8 percent of all taxes, while the entire bottom 50 percent paid just 2.3 percent.” The authors offer an important lesson that should guide next year’s tax debate:
Every tax involves some distortion of economic activity, and even just the current tax system has discouraged large amounts of economic activity, a point emphasized by the late Harvard professor and Reagan economic advisor Martin Feldstein. By the time the government is at a point where taxpayers are literally tapped out, the increases have already wrought much economic destruction. However, if the government’s primary objective were grounded in maximizing prosperity, policy makers and politicians would start by figuring out what economic and political systems would achieve the best long-term productive output of a society, subject to allowances for some redistribution, not simply what income tax rates maximize government revenues.
Read more from Rauh here.
Blue State Follies
At the 1920 Census, Chicago’s population was 2.7 million, up over 516,000 in a decade. More than 100 years later, Chicago’s population is 2.66 million, a loss of 128,034 from nine straight years of decline.
Chicago’s population is lower now than it was in 1920, with steady drops in each of the past nine years. According to the most recent U.S. Census Bureau estimates, Chicago’s population was 2,664,452 in July 2023. Chicago’s population has not been this low in more than 100 years.
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Peter Huessy is a Member of the Montgomery County Republican Central Committee. Since 1981 he has been President of Geo-Strategic Analysis of Potomac, Maryland. He was a former special assistant to the Secretary of the Interior and consultant to the US Air Force. He can be reached at [email protected]