How a Trade War with China Would Impact You

In an aggressively worded statement, China’s commerce ministry blasted President Donald Trump’s order to prepare tariffs on $200 billion of imported Chinese goods. The commerce ministry threatened decisive retaliation, but remained vague on the details.

China will “adopt comprehensive measures in quality and quantity in order to make strong countermeasures,” according to the statement. The Chinese government announced its readiness to “defend the interests of the Chinese people and enterprises” against tariffs the United States may enact.

So far, China has instated only minor retaliatory measures. After Trump announced his tariff plan, China announced 25% tariffs on U.S. goods, including soybeans and beef. The government also ended talks that would have allowed them to import more U.S. goods, particularly farm goods and natural gas.

An Uneven Playing Field

Last year, the U.S. bought four times more from China than China did from the United States. Experts agree that any Chinese import tariffs levied against the U.S. will not be the game-changers that China intends. China depends on the United States for its burgeoning export business.

China’s new refusal to purchase soybeans and beef has already hurt American agriculture, particularly in the farm regions of the Midwest. However, the real impact of these taxes will strike in the consumer goods sector.

How Tariffs Will Impact You

Last year Americans bought over $167 billion in computers and electronics made in China, with another $40 billion in other electronic devices. A trade war between the U.S. and China could lead to Americans paying more for computers, phones, and other devices. The electronics in your car, your kitchen, and your workplace could all become more expensive.

One impact of the tariffs might appear in your refrigerator. Should Trump and Congress enact tariffs on aluminum, beverage packaging prices will increase. Trump proposed a 10% tariff on aluminum and a 25% tariff on steel. Such taxes would increase the cost of soda and beer.

If and when China retaliates, Trump won’t back down. He said Friday that he will institute even more tariffs if the Chinese follow through on their plan to set tariffs of their own.

Despite the controversy, Trump had kind words for China’s leader. “Look, he’s my friend, President Xi. He’s a great man, he’s a wonderful guy, but at some point we have to straighten it out,” the President told Fox News on Monday.

Washington State Legislature Tries to Tax Vapes to Death

A bill introduced in Washington wants to tax all nicotine vaping products in an effort to ‘price them out’ of the reach of young people. Washington state lawmakers might be exaggerating the data about underage vapers in order to get this legislation passed.

To vape, or not to vape

The bill, known as HB 2165, seeks a massive tax hike on vapes and vaping liquid, saying

“Increasing the price of vapor products will decrease youth access and addiction, just as raising taxes on cigarettes to discourage youth and adult smoking decreased youth access and addiction.”

HB 2165 claims 23% of high school seniors “used an e-cigarette in the last month.” This does not parse out those who tried it once and stopped, nor does it mention how many actually went on to become users of a tobacco-replacement. It simply states the number of teens who have used it at least once in the last month.

The bill’s authors, however, don’t seem to find that data necessary. Instead, they state “these rates are alarming because an overwhelming majority of smokers begin smoking and become addicted to nicotine as teenagers.”

Correlation does not equal causation. Using a vape doesn’t translate to smoking cigarettes, yet the bill doesn’t make that distinction.

Pro-vaping groups advise voters to oppose HB 2165 along with HB 2144. Similar laws passed in other states have forced legitimate small businesses to close under the weight of the tax burden. HB 2144 aims to tax vapor nicotine by 95%.

The test cases show that these bills will do nothing but penalize local business owners.

HB 2165 is on its way to the Appropriations Committee, where it could languish forever. Proponents of the bill, however, are pushing hard to see the bill move from committee to the state legislative floor.

Virginians Continue to Face Rising Tolls on 66

Tolls on I-66, a Northern Virginia route that is infamous for congestion during rush house, have continued to rise.

According to commuters, on January 18th, tolls were projected at $47.25 during rush hour, despite there be nothing abnormal on the route.

Little Choice for Commuters

66 is a major highway into Washington, DC from the Nothern Virginia area. Before tolls were put into place in December, congestion was controlled by legally requiring all cars to contain at least two passengers to commute.

On December 4th, tolls were implemented requiring all drivers to have an EZ-Pass.

HOV compliant cars are still exempt from paying, but cars with less than two passengers face tolls. Depending on when they commute, these fees could be over $40.00 per day.

The new system has been plagued with backlash. For many Virginians, 66 is their most direct route to work in DC proper.

On Tuesday, the website and app that predict the toll price experienced a glitch which caused sticker shock when commuters saw the $39.00 toll on their bills. As of yet, no refunds will be issued for any commuter who chose 66 based on the absent tolling info.

GOP Budget Passes House, Paves Way for Tax Overhaul

The GOP’s $4 trillion budget passed the House of Representatives this week. This marks an important step on the path to tax reform.

The budget passed the House narrowly, with a margin of 216-212. Twenty Republicans voted against the plan, along with Democrats. This suggests that tax reform faces significant obstacles if it is to pass by the end of the year.

Only 45% of Americans pay any federal income tax. If you’re one of them, the new GOP tax plan contains provisions that might surprise you.

Changing Tax Deductions

In years past, taxpayers have had the option of deducting either a standard deduction, or the amount of your state and local income taxes. The state and local income tax deduction, called SALT, remains popular: More than 44 million Americans choose to deduct their state and local taxes from their federal tax bill. They would no longer be allowed to do this, should the GOP tax plan become law. However, corporations would still get to deduct those taxes from their federal tax bill.

If and when the SALT disappears, the standard deduction would rise. Taxpayers would be allowed to deduct the first $24,000 of their income. Depending on how your income is structured, this could serve as a huge benefit. Some Americans, however, will feel the pain of losing the SALT deduction.

Public Opinion

One poll shows that over half of Americans oppose this plan in its current form. Only 34 percent of the country supports the proposal. However, American voters want tax reform. Simplifying the tax code, and easing the tax burden, were two components of Trump’s campaign. The Republican members of Congress who voted against the budget did so not because they oppose reform, but because they think the reform does not go far enough to give taxpayers a break.

The Trump Administration has repeatedly stated that this plan would allow the average American household to keep $4,000 more each year. While all of us have unique tax situations, keeping more of your income sounds like a good idea to all. Sen. Orrin Hatch (R-UT) and Rep. Kevin Brady (R-TX) crafted this tax plan.

How Much are YOU Taxed to Fund the NFL?

Politics and sports don’t mix well, and the firestorm of debate about NFL players taking a knee during the national anthem is just one example. Another is the confusion over the NFL’s tax status, which has been renewed after President Trump tweeted earlier this month about the league’s “massive tax breaks.”

Federal Tax Status

The NFL League Office now pays federal taxes, though that was not always the case. It’s the 32 NFL teams that get massive tax breaks, usually granted by states and cities.

Until 2015, the NFL League Office paid no federal taxes. Because it functions like a trade organization, the federal government allowed it to remain tax-exempt. he NFL League Office functions as a trade association that represents the league’s 32 teams. It promulgates and enforces the league’s rules, promotes the NFL to the public, and does other administrative tasks like hiring referees, running the college draft, and conducting player safety research.

In 2015, the League Office gave up its tax-exempt status and start paying taxes. The move was voluntary –  primarily because the league wanted to rid itself of the criticism its tax-exempt status was generating. Apparently, the roughly $10 million dollars per year the League Office saved on taxes wasn’t worth the public relations headache.

Teams Get State Subsidies

The teams are all individually owned, and all are classified as for-profit organizations that are subject to taxation on every dollar of income they generate. However, states and cities grant teams massive tax breaks, while subsidizing stadiums with your tax dollars.

For instance, Louisiana grants the New Orleans Saints about $165 million in tax breaks. Citizens in one Nevada county paid an extra $750 million in taxes to subsidize the Las Vegas Rams. In total, NFL stadiums have benefitted from $1.1 billion in taxpayer subsidies.

Even though the NFL pays federal taxes, it still receives a sweet chunk of change from taxpayers.

The NFL generates upwards of $10 billion in revenue per year, with profits exceeding $1 billion annually. And yet, you and I are still paying taxes that fund the creation of stadiums and cushy deals for teams.

GOP Establishment Disguises Tax Hike

Nearly every Republican in Congress ran on a platform of cutting taxes. However, some of them now want American businesses to pay even more to Uncle Sam. The proposed GOP tax plan claims to lower the corporate tax rate to 25%. It also ensures that the lower rate will not apply to 80% of the American economy.

The Republicans behind this tax plan, many of whom will not share their names with the press, have decided to pick and choose which businesses to benefit. Manufacturing companies will pay the lower rate, while service companies are exempt from the tax cut. Most American small businesses are in the service industry, while only large corporations typically have the money to build manufacturing plants.

Even approved manufacturing companies might still pay higher taxes, depending on state and local taxes.

Personal Ramifications

The tax plan purposefully tilts the playing field for businesses, and it leaves personal taxes murky as well. The plan leaves open the possibility for a fourth tax bracket. People in that bracket could be exempt from planned tax cuts.

If you itemize your tax deductions, you will pay more to the IRS under this plan. The GOP tax plan would eliminate the state and local tax deductions. You and your employer might both be paying higher taxes should the current tax plan become law.

Equifax Gets Hacked, IRS Awards them a Contract

Well, this seems almost too dumb to be real. Equifax, the company that announced massive data breaches last month, has received a contract to work for the government.

The IRS awarded Equifax a contract to work on verifying consumer identities. The company has proven itself unable to keep personal data safe. Last month, Equifax announced that hackers had accessed the social security numbers of 145.5 million Americans.

No Alternatives Considered

Despite the company’s recent security failures, the IRS awarded it the contract without considering any other bids. The IRS claims that no other company can perform this sort of work. However, Equifax has competitors that may have better data security practices.

Tax Money to Equifax

The government has decided to send millions of our tax dollars to a company with dire security flaws. Not only that, but several Equifax executives may have profited from the scandal. Three of the company’s leaders sold $1.8 million in stock before the data breach became public. The three are under investigation for potential insider trading.

IRS Re-Hires 213 Criminal Employees

A new report shows that the IRS re-hired 213 fired employees.  While initially employed by the agency, these employees committed offenses like tax evasion, falsifying documents, and misuse of taxpayer data.

Refilling the Swamp?

These “public servants” have access to Americans’ most sensitive financial information. Someone who abuses that power could collect data on innocent citizens and potentially use that information to commit a crime.

The 213 fired employees represent only a fraction of the problem at the IRS. Out of all the IRS employees caught breaking the law, Forbes reports that only 39% get fired. Though the agency demands honesty and accuracy from citizens, it seems to have much lower standards for its own internal dealings.

Commissioner Koskinen Under Fire

The re-hiring began in late 2015, under the leadership of Commissioner John Koskinen. Koskinen, an Obama appointee, faced impeachment hearings last Fall regarding the alleged targeting of conservative groups.

A year later, the IRS faces public scrutiny yet again.

Trump Announces Plan to Renegotiate NAFTA

President Trump formally announced to Congress that he will renegotiated NAFTA as early as August 2017. There is a 90-day consultation period for the Trump administration, Congress and private businesses to determine what must absolutely be renegotiated.  After this, President Trump will renegotiate with Mexican and Canadian officials, at which time he will promote regulations more fair to American businesses.  Trump may require Mexico and Canada to raise their de minimis thresholds (DMTs), which, as they stand, stifle American small business exports.

American DMTs

Each country determines its own DMT When an export to that country is worth more than the DMT, the exporter must pay an additional tax on the shipment. For example, the current US DMT is 800 USD. This means that a Mexican company may pay no tax if it sends a shipment worth 799 USD across our southern border.

Do Americans enjoy the same privileges? N0. American exporters must pay taxes on everything above 20 CAD (in Canada) and 20 USD (in Mexico). Why should our businesses have to pay more taxes? President Trump has an opportunity to level the playing field.

Demanding Reciprocity

Currently, both Mexico and Canada agree to work on mutually beneficial trade deals. The DMT issue will test the seriousness of their commitment to making NAFTA work.

The Obama Administration actually worsened the problem by raising our DMT from 200 USD to 800 USD in 2015.

It is undeniable that President Trump must negotiate deals that protect small businesses in America. Raising the Canadian and Mexican DMT levels would help accomplish this. President Trump could use this opportunity to level the playing field and stop stifling American small business exporters.

Financial Markets Rally, Relax on Trump Tax Plan Announcement

President Trump released his long-anticipated tax reform plan on April 26th, setting up another major legislative push for his administration. The White House hopes to get tax reform through Congress to secure a victory for the administration and to make good on a promise to the American people.

Trump’s announcement did not unveil the actual legislation, but it provided key points about what to expect in a bill.

Tax Reform Details

One of the main goals of Trump’s tax reform is to reduce the amount of individual income tax brackets. Currently, there are seven income tax brackets for Americans. Trump would like to bring that number down to three brackets, with rates at 10%, 25%, and 35%. A top rate of 35% would be a 4.6% decrease from the current top rate of 39.6%.

Along with simplifying the tax bracket, Trump’s proposal calls for a drastic reduction in the corporate income tax rate. The United States currently holds one of the highest corporate tax rates in the world at 35%. Trump’s plan would drop that rate down to 15%, in what the administration is calling “the largest tax cut in U.S. history.”

Experts and the Market React

The Dow Jones industrial average climbed to within 1% of its all-time high on the day of President Trump’s announcement. The S&P 500 Index also came close to exceeding its all-time high. Both indices ended up decreasing as the day wore on. John Conlon, chief investment officer at People’s United Wealth Management, attributes this to the earliness in the reform process. “The discussion around the tax plan is a positive for the market,” Conlon said. “I think it takes some pressure off the market, but there are still questions about some of the details.”

President Trump has had a positive effect on the stock market since his election in November. The S&P 500 has posted a weekly gain of approximately 2%, totaling 11.6% since the election. Expectations of lower taxes on both people and corporations might have precipitated some of this growth. Should President Trump follow through successfully on tax reform, the markets would react strongly.