“Probably one of the worst bills in the history of the United States of America. The debate on health care is like death. This is Armageddon.” — House minority leader Nancy Pelosi, describing the Republican tax cut bill, December 4.
Ladies and gentlemen, witness the horror of our Armageddon:
In the hours after Congress approved the GOP tax cut plan, a handful of companies jumped to announce plans to share some of the proceeds on their employees and spend on infrastructure. Boeing was first out of the gate, followed by AT&T, which said it would give more than 200,000 unionized employees a special bonus of $1,000 once the tax bill is signed. The company also said it would increase its capital expenditures by $1 billion.
Both Fifth Third Bancorp and Wells Fargo followed, saying they would raise their minimum wage to $15 an hour. Fifth Third said it would also give workers a bonus, and Wells Fargo said it would give $400 million to community and nonprofit organizations next year.
Comcast, which owns CNBC parent NBCUniversal, said it would pay 100,000 frontline and non-executive employees special $1,000 bonuses. The company also said it is making the move because of the FCC’s recent change in broadband rules and tax reform. It also said it plans to spend well in excess of $50 billion over the next five years on infrastructure improvements.
“This is exciting stuff. This is good. This is not just a whole bunch of guys saying I can buy back a lot of stock here and jazz up my numbers through financial engineering. This is a bunch of business leaders saying we can use this tax benefit to grow our company, keep our loyal employees and assist the community,” said Dick Bove, banking analyst at Vertical Group.
What’s fascinating is how many commentators you will see who will offer variations of A) “This is just one/two/three/four/five companies!” B) “$1,000 isn’t really that much!” C) The companies and corporate executives will get a lot more!” and so on. They can’t look at announcements like this and say, “oh, good. A lot of workers will get some more money in their pockets as 2018 begins, this can only be a good thing.”
In a better, more reasonable, less reflexively partisan world, we would all be willing to applaud when an idea we didn’t support has at least one good effect.
Even if these companies are making these moves with less-than-noble motives, wanting good publicity or to ingratiate themselves with the administration . . . so what? Do you think the workers getting those bonuses will feel like they’re tainted? “I’m going to tear up my bonus check, I think they’re just trying to use me for a photo-op.”
Besides, I already liked Lily from AT&T, and she couldn’t possibly be trying to manipulate us, right?
Something to keep an eye on in the coming days are people who claim they’re getting socked with a big tax hike under the plan who don’t or won’t spell out how they reached that conclusion. Yesterday I encountered a Twitter user living in Detroit who insisted, “many of us pay way more than $10k in state and local taxes and don’t reach the AMT limit and only get a slight break on tax rate.”
For 2017, the alternative minimum tax kicks in at $54,300 for those filing singly and $84,500 for those married and filing jointly. If you’re under that level, your income tax rate is going down three percentage points under the new system both single and married taxpayers. Plus, if you’re making less than the AMT limit, I’m trying to figure out how you can possibly be paying “way more than $10,000 in state and local taxes.”
Maybe someone could find themselves with a bad tax bill if they make a modest salary but own a lot of property and get hit with property taxes. Michigan has a 4.25 percent state income tax, there’s a 2.4 percent Detroit income tax. Wayne County has a property tax that is complicated to calculate but is pretty high, averaging out to 2.6 percent. The property tax is high, but also remember that Detroit real estate is relatively cheap. How many people own non-revenue-generating high-value real estate in high-property tax jurisdictions, but their taxable earnings are below the AMT limit?
Liberal Sirius XM host Dean Obeidallah declared on Twitter, “Just spoke to a friend in Massachusetts — the GOP tax plan will raise their taxes by $10,000 a year because they can no longer deduct state and local taxes from federal income. For a family of 5 that is very painful tax hike.”
It’s difficult to determine without this unnamed person’s specific figures, but I don’t think that adds up; at the very least, they’re in a really unusual set of circumstances.
Remember, if you’re used to deducting $20,000, it doesn’t mean your tax bill goes up by $10,000. It means your taxable income goes up by $10,000. To calculate out to a tax hike of $10,000, this unnamed friend must have an unbelievably high state and local tax bill. (Remember, the average state and local tax deduction for a filer in New York City is $24,000; this unnamed friend would have to be deducting way more than that to add up a $10,000 increase in taxes due. (At 5.1 percent, Massachusetts’ income tax rate is actually on the lower end of the national spectrum.) Again, maybe this person has an enormous property tax bill, but it’s hard to believe that the reduction in this taxpayer’s income tax rate wouldn’t offset the increase in taxable income without the SALT deduction. (Keep in mind, this family of five, with presumably three dependents, just had their child tax credit increase by $400 per child, or $1,200 in total.)
In other words, in pretty rare circumstances, the changes in the tax bill could calculate out to a net tax hike. It’s just odd that all of those people happen to be the unnamed friends of liberal commentators.
Wait, Who’s Really Living in a Fantasy World?
I had not expected this particular dashed-off tweet to hit such a nerve. Some argue, fairly, that it’s a non-sequitur to respond to an accusation of being disconnected from reality — snide and disrespectful as it may be — with a comment about the recent scandal at the Today show, and it’s not fair to blame Guthrie for Matt Lauer’s behavior. (I don’t think that’s what the tweet does.)
I didn’t have any particularly strong feelings about the Today show before the scandal, and Savannah Guthrie seemed like a delightful person in my very limited interactions with her many years ago. But the revelations about Lauer divulged that the Today show’s warm onscreen atmosphere hid a repulsive behind-the-scenes core, one that at best turned a blind eye to Lauer’s actions and may have indulged and abetted it. The 2008 Friars Club Roast of Matt Lauer — attended by most of Lauer’s current and former colleagues at the time and many top stars of the media world, and only reported in the Village Voice — indicates Lauer was, at the very least, widely believed to be a notorious womanizer having relationships in the workplace. NBC’s claim that they responded to the “first complaint about his behavior in the over 20 years he’s been at NBC News” doesn’t pass the smell test. The Vanity Fair headline was blunt: “Everybody knew.”
It was awkward and cringe-inducing enough when Time magazine’s editor-in-chief announced “the silence breakers” were the newsmaker of the year on the set of the Today show . . . probably sitting in a seat that Matt Lauer had sat in just a few weeks earlier. It’s a little insufferable to watch a program denounce predatory men and unrestrained sexual harassment in the workplace . . . when it either tolerated or enabled that behavior behind the scenes for so long.
We still haven’t received much of an update about who knew what at NBC and when. We still haven’t gotten many good answers about why Ronan Farrow encountered such internal skepticism and hostility as he pursued the story about the scandals around Harvey Weinstein. Think about it, the New York Times reported that Lauer asked a staffer into his office, used his secret lock, and proceeded to have intercourse with her until she passed out. She had to be taken to get medical attention afterward. Think about how many journalists at NBC had that galling, shocking story under their noses . . . and either missed it or didn’t feel comfortable reporting or discussing that story.
This may not be fair to Guthrie, but I don’t think that NBC News or anyone associated with the Today show is in much of a position to accuse others of living in a fantasy world or being disconnected from reality. The show’s hosts, reporters and producers are ready to jump back to “normality,” where they can accuse the speaker of the House of living in a fantasy world because Michael Bloomberg is critical of his tax cut legislation. Hold up a minute, guys, you just tossed your moral authority and public trust into a giant bonfire.
ADDENDA: In an interview with CNBC, New Jersey governor-elect Phil Murphy says his state will challenge the “legality and constitutionality” of the tax cut. Er . . . on what grounds? Earlier this year he claimed that “by ending the local tax deduction, the Republican tax bill could create an ‘unconstitutional double tax’ since people would pay federal taxes on income from which local taxes already were subtracted.” But the bill didn’t end the local tax deduction, it merely capped it, and if that’s the case, why wouldn’t someone be able to deduct their local taxes from their taxable income for the state?