Will Tax Reform Increase or Limit Liberty?

President Trump and the congressional Republican leadership recently unveiled a tax reform ‘framework.’ The framework has a number of provisions that will lower taxes on middle-class Americans. For example, the framework doubles the standard deduction and increases the child care tax credit. It also eliminates the alternative minimum tax (AMT). Created in the 1960s, the AMT was designed to ensure the ‘wealthy’ did not use ‘loopholes’ to ‘get out of’ paying taxes. Today the AMT is mostly a means to increase taxes on the middle class.
The framework eliminates the ‘death tax,’ thus enabling family-owned small businesses and farms to remain family owned. It also helps the economy by lowering the corporate tax rate to 20 percent, reducing taxes on small businesses. The framework also adopts a territorial tax system, which means US companies would only pay tax on profits earned in the United States.
However, the framework is far from a total victory for liberty. Concerns have been raised that, depending on what income levels are assigned to what tax brackets, the plan could increase taxes on many middle- and lower-income Americans! This is largely due to the framework’s elimination of most tax deductions.
The framework also contains a stealth tax increase imposed via the chained consumer price index (chained CPI). Supporters of chained CPI clam the government is currently overstating inflation. The truth is exactly the opposite: government statistics are manipulated to understate inflation.

This post was published at Ludwig von Mises Institute on October 10, 2017.

It Was All A Dream – – Japan’s Monetary Fiasco Removes All Doubt

Last Friday the Statistics Bureau of the Japanese Ministry of Internal Affairs and Communication reported some more bad news for Prime Minister Abe and really Bank of Japan chief Kuroda. Month-over-month, the consumer price index was down again, leaving it 0.48% less in June 2016 than June 2015. This was the third consecutive month of increasingly negative year-over-year CPI estimates.
When QQE was first implement back in April 2013, its staff economists guessed that it would take two years to get Japan back to 2% inflation; the standard target for almost all the central banks in the ‘developed’ world. The point of QQE as apart from all prior QE’s, and there had been nine or ten before it depending on your definitions, was that it would be so big, powerful, and sustained that the ‘deflationary mindset’ that had, according to orthodox economists, gripped Japan for decades would be forced to surrender to this new monetary regime. Two years was their conservative forecast.
The Bank of Japan did achieve the first part; the central bank has, as of the latest balance sheet figures for June 2016, quadrupled the level of bank reserves in Japan. The end of month balance in March 2013 was 52.6 trillion, a number that at the outset of prior QE’s was already supposed to be impressive, further meaning that it wasn’t as if BoJ was starting from nothing. More than three years and an acceleration of QQE later, there are now 272.6 trillion of bank reserves in Japan, an increase of 418.2%.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ August 3, 2016.

The Dollar’s Little Helpers – -Hedge Funds Are Piling On

CURRENCY TRADERSare growing more bullish on the dollar as a consensus builds that the Federal Reserve is approaching liftoff.
The greenback climbed to a seven-month high against the euro after data showed U. S.inflation and factory output increased in October, fueling speculation the U. S. central bank will raise interest rates from near zero as soon as next month. The rally comes as hedge funds and other large speculators boosted wagers on dollar gains versus eight major currencies by a net 198,491 contracts over the past three weeks, the biggest jump since March 2013, according to data through Nov. 10 from the Commodity Futures Trading Commission.
‘The environment is more dollar-positive,’ said Georgette Boele, a currency strategist at ABN Amro Bank NV in Amsterdam. ‘The momentum was already optimistic and the consumer price index data has not taken that away,’ said Boele, whose bank expects the dollar to strengthen to $1.05 against the euro by the end of the year from $1.0642 per euro as of 5 p.m. in New York.

This post was published at David Stockmans Contra Corner on November 18, 2015.

Crazy Train: Rents Skyrocket While Core Inflation Remains Nonexistent (Fed Can’t Generate Inflation)

All aboard the central bank crazy train!
The Consumer Price Index (CPI) fell 0.2% in September. The Fed continues to fail to generate ‘inflation.’
But the real crazy train is housing where rents are skyrocketing at 3.09% YoY, the Case-Shiller 20 home price index is rising at 4.96% YoY, while CORE CPI YoY is only rising at 1.3% YoY.

This post was published at David Stockmans Contra Corner by Anthony B. Sanders ‘ October 15, 2015.