Current Research for the MLA LD & PF Debate Topic…
TOPIC: Abolish the \’Capital Gains\’ Tax
Resolved: The United States should abolish the capital gains tax.
[EXTREMELY IMPORTANT]
Some of the articles I am sharing argue something very important: whenever we do tax cuts, we tend to balance them with spending cuts; particularly when Republicans are in control of the budget-writing process (as they are in the SQ currently).
So… any gains that come from abolishing Capital Gains Tax, will lead to massive cuts to social welfare programs threatening the lives of many millions of people. If you read these articles, you get the impressions that substantial tax cuts will harm more than 2/3\’s of American citizens and will be substantially harmful to the elderly who cannot recover, because they are no longer able to work and earn income as they did when they were younger.
Whiteboard Photos (& Research Packets):
[-] PF Research – Capital Gains Tax (Champion Briefs, 2018-01-01).pdf
[-] PF Research – Capital Gains Tax (Forensics Files, 2018-01-01).pdf
[-] PF Research – Abolish \’Capital Gains\’ Tax (Victory Briefs, 2018-01-01).pdf
[*****] PF Arguments (Capital Gains Tax – Final) – PRO & CON (MLA, 2018-02-26).pdf
Research Videos (Required):
[-] FEB Public Forum Topic Analysis (Champion Briefs, FEB 2018 – 23 min)
Research Articles (Required):
[See Below! – I am copy-pasting useful data at the bottom of the page.]
Contact Information (Coach Bill):
Bill Eddy,
coachbill@magnetacademy.com
714.655.8135 (I prefer text)
When contacting me, please include your name and class information (day/time). Thanks!
Why tax cuts for the wealthy will explode the deficit but not economic growth
Los Angeles Times, October 14, 2017
http://www.latimes.com/opinion/readersreact/la-ol-le-trump-tax-cuts-wealthy-20171014-story.html
NOTE: Dr. Ken Goldman, Tax Expert, Former Advisor to the U.S. Treasury Department\’s Office of the Tax Legislative Counsel.
CON: Tax Cuts Often Fatally Flawed (Fail to account for loopholes – no need for cuts)
S: According to… Dr. Ken Goldman, Former Advisor to the US Treasury, Los Angeles Times, OCT 14 \’17
http://www.latimes.com/opinion/readersreact/la-ol-le-trump-tax-cuts-wealthy-20171014-story.html
F: The logic behind the recent tax cuts are fatally flawed. Their biggest target is the so-called \”high\” 35% corporate rate. But the rate most companies pay is much lower due to numerous deductions, loopholes and tax incentives.
C: This means… a giant tax cut to capital gains will be similarly flawed and will fail to expand the economy.
CON: Tax Cuts Often Fatally Flawed (Fail to account for loopholes – no need for cuts)
S: According to… Dr. Ken Goldman, Former Advisor to the US Treasury, Los Angeles Times, OCT 14 \’17
http://www.latimes.com/opinion/readersreact/la-ol-le-trump-tax-cuts-wealthy-20171014-story.html
F: Corporations today are sitting on almost record amounts of cash. If companies are not using that cash to create new business and new jobs now, how would another tax cut accomplish anything different?
C: This means… when the capital gains tax cut happens there will be almost 0% this re-investment into these companies, which means it will not only fail to improve the economy, but it will also lead to less tax money available for programs designed to stimulate the economy — trickle down economics doesnt work!
CON: Tax Cuts Increase US Debt (Creating potentially massive deficits)
S: According to… Dr. Ken Goldman, Former Advisor to the US Treasury, Los Angeles Times, OCT 14 \’17
http://www.latimes.com/opinion/readersreact/la-ol-le-trump-tax-cuts-wealthy-20171014-story.html
F: So reducing tax rates for companies and/or tax brackets for the wealthy we will see massive additional U.S. debt, which will actually slow the economy.
C: This means… just as tax cuts often do, instead of helping make the economy stronger, they weaken the economy through the massive debt and the huge deficits that are being created.
CON: Tax Cuts Focus on Wrong Target Group (Focusing on wealthy < focusing on middle class)
S: According to… Dr. Ken Goldman, Former Advisor to the US Treasury, Los Angeles Times, OCT 14 \’17
http://www.latimes.com/opinion/readersreact/la-ol-le-trump-tax-cuts-wealthy-20171014-story.html
F: The real way to create jobs would be a sharp tax reduction targeted to the lower and middle classes, who will then use the money to purchase more goods and services, which in turn will create new jobs and additional tax revenue.
C: This means… by focusing on a tax cut for the wealthy, at the expense of middle income families, the economy will not only fail to grow, but the resources that could have gone to the middle class are lost as well, which menas voting for the proposition will actually prevent better alternatives from being achieved.
Your Guide to Capital Gains Taxes in 2018: Here\’s what investors need to know about how the Tax Cuts and Jobs Act could affect your capital gains taxes.
Matthew Frankel, Motley Fool, December 22, 2017
https://www.fool.com/taxes/2017/12/22/your-guide-to-capital-gains-taxes-in-2018.aspx
Analysis of the 2017 Tax Cuts and Jobs Act
The Heritage Foundation, December 19, 2017
https://www.heritage.org/taxes/report/analysis-the-2017-tax-cuts-and-jobs-act
Tax Cuts and Jobs Act of 2017
Wikipedia <– Do not cite \’W\’ (just look up their sources!)
https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017
Minor impact on economic growth[edit]
Paul Krugman disputed the Administration\’s primary argument that tax cuts for businesses will stimulate investment and higher wages:[22]
**Foreigners own about 35% of U.S. equities, so as much as $700 billion of the tax cut will go overseas, as corporate after-tax income will flow to these investors as stock buybacks and dividends.[76]
**CEO\’s indicate that tax cuts aren\’t a big factor in investment decisions.[22]
**Significantly increasing capital expenditures requires an inflow of foreign capital, strengthening the dollar, increasing trade deficits and potentially costing up to 2.5 million manufacturing and supporting jobs.[77]
In November 2017, the University of Chicago asked over 40 economists if U.S. GDP would be substantially higher a decade from now, if either the House or Senate bills were enacted, with the following results: 52% either disagreed or strongly disagreed, while 36% were uncertain and only 2% agreed.[78]
The Tax Policy Center estimated that GDP would be 0.3% higher in 2027 under the House bill versus current law, while the University of Pennsylvania Penn Wharton budget model estimates approximately 0.3–0.9% for both the House and Senate bills. The very limited effect estimated is due to the expectation of higher interest rates and trade deficits. These estimates are both contrary to the Administration\’s claims of 10% increase by 2027 (about 1% per year) and Senator Mitch McConnell\’s estimate of a 4.1% increase.[79]
Federal Reserve Bank of NY President and CEO William C. Dudley stated in January 2018: \”While this legislation will reduce federal revenues by about 1 percent of GDP in both 2018 and 2019, I anticipate the boost to economic growth will be less than that. Most importantly, most of the tax cuts accrue to the corporate sector and to higher-income households that have a relatively low marginal propensity to consume. This suggests that a significant portion of the tax cuts will be saved, not spent.\”[80]
The Republican tax plan leaves a $1.5 trillion bill for the middle class to pay,
Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
PRO: Elderly Need Financial Protections
[SQ Moving Toward Massive Spending Cuts — incl. Social Security & Medicare — removing C.G. tax will reduce the suffering of millions of elderly]
S: According to… Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
Q: That bill has to be paid for, somehow. Congress could keep rolling over the debt, yes, but historical experience suggests that tax cuts are typically paid for by tax hikes in the future. Republicans have suggested they want to finance the cuts by slashing entitlement programs like Social Security, Medicare, and food stamps. “We\’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” House Speaker Paul Ryan said in a radio interview on Wednesday.
PRO: Benefits for the Elderly Cut (to Reduce the Deficit)
[SQ Moving Toward Massive Spending Cuts — incl. Social Security & Medicare — removing C.G. tax will reduce their suffering]
S: According to… Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
Q: When the bill is paid for, it winds up hurting most Americans: Republicans haven’t put out any specifics about the Social Security, Medicare, and other spending cuts they want to use to reduce the deficit.
PRO: Tax Cuts Threaten \’Vast Majority of Americans\’
S: According to… Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
Q: Whether you pay for the $1.5 trillion through tax hikes or spending cuts, that financing changes who ultimately wins and loses under the bill. And a new study by the Tax Policy Center suggests that when you take financing into account, the vast majority of Americans lose out.
PRO: Spending Cuts focus on programs for the poor and elderly
S: According to… Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
Q: More to the point, Republicans’ efforts to cut spending have focused almost exclusively on programs for the poor, like Medicaid or Supplemental Security Income or food stamps. President Trump’s budget proposal includes $2.1 trillion in cuts to Medicaid, Affordable Care Act subsidies, food stamps, Social Security Disability Insurance, Supplemental Security Income, and cash welfare (TANF). That would go a long way toward paying for tax cuts, and its impact would be even more concentrated on the poor than in scenario 1, where spending is cut equally per capita.
CON: Another \’Gift\’ for the Rich & Powerful
S: According to… Dylan Matthews, VOX Corporation, December 8, 2017
https://www.vox.com/policy-and-politics/2017/12/8/16751032/senate-house-republican-tax-plan-deficit-spending-cuts
Q: The US doesn’t spend a lot of money directly on rich people; our benefits to the affluent tend to come through the tax code, through provisions like lower rates on capital gains, [etc.].
The Four Big Tax Deceptions
New York Times, November 28, 2017
https://www.nytimes.com/2017/11/28/opinion/republican-tax-plan.html
NOTE: This article can help you understand the current tax situation so that you can better control the uniqueness debate. If they argue things from before the tax cut, then their conclusions are automatically invalid as they are describing a tax system that has since been changed. I have not yet found whether or not this tax plan passed and was signed by the president (it was signed on Dec 22nd).
PRO: Social Security Cuts Necessary to Reduce Deficit
S: According to… New York Times, November 28, 2017
https://www.nytimes.com/2017/11/28/opinion/republican-tax-plan.html
Q: And all of these estimates understate the long-term damage to the middle class because they ignore the cuts to education, transportation, Medicare, Medicaid and Social Security that will eventually be necessary to reduce the deficit.
Social Security Fact Sheet
Social Security Administration, LA: February 2018
https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
IMPORTANT: This will give you the statistics for the protecting elderly debate on the PRO side.
People Aged 65 and Older Who Rely on Social Security for 90% of Family Income (in 2013) and Average Monthly Benefit (December 2014) by State
Public Policy Institute, November 12, 2015
https://www.aarp.org/ppi/info-2015/people-aged-65-and-older-who-rely-on-social-security-for-90-percent-of-family-income-and-average-monthly-benefit-by-state.html