Updates

GT Update: May 17, 2017

Dear Greylock Together,

What a week! How are you doing? Outraged? Desensitized? Tired? If you’ve been feeling overwhelmed, astonished, excited perhaps, or maybe even defeated, I’m right there with you.

What will happen next with regard to Comey’s firing, the Russia investigation (hooray for the appointment of former FBI Robert Mueller as Special Counsel!), and repercussions at the White House remains to be seen. (Here’s a guideIndivisible has created regarding what’s been happening, if you need a primer.)

However, this frenzy of news, and our collective activism has me wondering how we can sustain our energy, or know which actions to take at what time. My feeling is that the one thing we can control is our own actions. We can decide which issues are of greatest important to each of us individually, how we’d like to express ourselves and exercise our voices as constituents, and what we’d like to share with our friends and family members.

Voter Suppression

In the meantime, receiving less coverage in the news was the May 11 establishment of a Presidential Advisory Commission on Election Integrity, with Kris Kobach, Kansas Secretary of State tapped to run the commission. This group and this man will inevitably lead to more voter suppression, and many rights groups are very concerned about this. See the ACLU’s take on this topic here.

Please Take the Voting Reform Survey

Don’t forget to weigh in on specific types of voting reform you’d like to see Greylock Together endorse as a group: http://www.greylocktogether.org/voting-reform-survey/

Mandatory Sentencing

Last Thursday, Jeff Sessions sent a memo to all Federal prosecutors requiring them to pursue mandatory minimum sentences for drug, gun, and gang-related crimes. This goes directly against the fairly widespread recognition that such tough sentencing for low level, non-violent drug crimes has not been effective in combating drug-related crimes, and has had a devastating negative impact on many in our country, in particular communities of color. Even the Koch brothers are against this policy. Call your state Attorney General to register your alarm and opposition: https://5calls.org/issue/recaNaMf3uFsmCamm

Book Group: White Rage

Our Book Group meets tomorrow, Thursday, May 16 at 7:00 p.m. at Congregation Beth Israel, 53 Lois Street, North Adams. We will be discussing White Rage by Carol Anderson, which provides a stark reckoning of our country’s structural oppression and disfranchisement of our black citizens. Voter Suppression, Mandatory Sentencing – none of this is new.

Local Politics

Williamstown held its annual Town Meeting last night, and among the articles voted in were a resolution to become a Pollinator Friendly Community, to change Columbus Day to Indigenous People’s Day, to affirm the town’s Immigrants Trust act (in support of town policy for town employees including police to not inquire about immigration status, or act at the behest of ICE), and zoning by-laws to restrict both by special permit and by location future applications for retail marijuana establishments. http://www.iberkshires.com/story/54588/Williamstown-Town-Meeting-OKs-Zoning-Bylaw-for-Pot.html

Kids Connect Kiddos on Willinet

For your dose of cute, with a heaping lift of hope for our future, see what some of our most recent Kids Connect participants learned about pollinators!

http://willinet.org/content/greylock-together-kids-connect-0

Race Talk

This past Sunday, a group of us gathered to have a conversation about race. We shared stories about what we’ve seen and experienced in our own community, ideas for how we might both become and indicate that we are an inclusive and welcoming community, and thoughts on how diversity education initiatives might be brought about for young and old alike. This is only the beginning, and we will get together again soon to continue and widen the discussion if you missed it. Stay tuned.

Our Next Greylock Together Meeting is this Sunday, May 21, 3:00-4:30 p.m. at the Williamstown Youth Center. Join us for a visit by Dustin Reidy from NY-19, and for committee meetings, as well as planning for specific state-level voter reform action.

See you soon!
Geraldine

New Attack on Obamacare: Key Points

by Chip Joffe-Halpern 4-23-17

The White House is pressuring House GOP leaders for another showdown vote on repealing Obamacare soon, possibly this week (April 24).

From what we know so far, the latest proposal would include allowing states to apply for “limited waivers” that would undermine Obamacare’s protections for pre-existing conditions. Under these waivers, states could opt out of Obamacare standards setting minimum benefits that health plans must offer and a requirement — called community rating — forbidding insurers from charging different prices to people based on health status.

An outline of his proposal said states could seek to relax “essential benefits” that Obamacare requires insurance plans to cover, such as emergency room trips, maternity and newborn care, and mental health services.  States also could request waivers to Obamacare’s ban on insurers charging sick customers higher premiums than healthy customers. But states would have to establish “high-risk pools” using government funds to help pay for insurance for people with costly medical conditions.

Historically, high-risk pool coverage are prohibitively expensive and there is little evidence to suggest that the existence of such pools made coverage less costly for others in the individual insurance market. People with preexisting conditions may have “access” to coverage, but most will not be able to afford it and those who can will face limited benefits and extremely high deductibles and out-of-pocket payments.

Action – calling Congressman Richard Neal:: (413) 442-0946
Senator Ed Markey: 413-785-4610
Senator Elizabeth Warren: 413) 788-2690

Script: Hi, my name is [NAME] and I’m a constituent from [CITY, ZIP].

I’m calling to object to any future bills aimed at repealing and replacing the Affordable Care Act, especially bills that allow waivers for pre-existing conditions, coverage of essential health benefits, and the implementation of high risk pools.  It’s been made clear that the majority of Americans want Congress to focus on making the current law work instead.  Thank you for your hard work answering the phones.

Republican Tax Plans: Key Points

KEY POINTS ON REPUBLICAN TAX PLANS, drawing on our session with Bill Gentry, Professor of Economics at Williams and expert on tax policy.                                                                    Jim Mahon 4/21/17

Background:  Tax economists think about three things when evaluating policy, while most of the rest of us think about one of these more than the other two. 

  1. What we all think about is equity between rich and poor, the way a tax system takes account of people’s (or firms’) ability to pay.  Tax policy people call this “vertical equity.” 
  2. What the rest of us  think about less is fairness between people or firms that make similar incomes but in different ways, or who use it in different ways.  Ideally, these people should face the same tax liability.  Policy wonks call this “horizontal equity.” 
  3. The other thing that mostly concerns tax economists is what they call “distortions,” which are economic decisions that people or firms make because of the tax code—beneficial projects that do not get done, or less beneficial things that do get done, because of the tax code (the general term for foregone economic activity is “deadweight loss”).   We non-economists sometimes think about this when these distortions affect economic growth, as with the related dimension of simplicity vs. complexity, most people (naturally) favoring a simple tax system that is relatively easy to deal with.
  • Under a Destination Based Cash Flow Tax (DBCFT), what is being called “Border Adjustability” in news reports, the government taxes cash flow rather than corporate income (profits). This implies that capital spending gets expensed (deducted from the taxable base) right away, rather than depreciated over time; and there is no deduction for interest paid, because in this view, interest is a cost of doing business.
  • In terms of reducing the distortions of the (corporate) tax code, Bill Gentry said that the idea of the DBCFT has a lot to recommend it. It is especially valuable during times of inflation, or when depreciation schedules are too slow for the capital goods (say, computers) a firm uses.
  • However, the bill favored by House Ways and Means Chair Kevin Brady, and Speaker Ryan, does not follow this idea consistently. One version of it preserves interest expensing, for example (something Trump is also likely to want), and does not allow firms to expense purchases of land.  It also wants to cut the rate applied to pass-through entities (such as limited partnerships), creating another loophole that firms would predictably exploit (a.k.a., a distortion in how firms organize activity).

[Here’s a decent explanation of the Ryan/ Brady plan, in cartoon form.]

  • Also, the move from an income-based corporation tax to a DBCFT would be expensive in the short term. Already-agreed tax treatment allowing interest and capital depreciation expensing would probably have to be honored while under the new rules, new capital outlays would be expensed 100 percent in their first year.  Especially if this were combined with a drop in the statutory rate from its current 35 percent to, say, 15 percent, we would have a big revenue hole in the first few years.  Given the PAYGO rules that impose a 10-year “budget window,” there would have to be a way to pay for this.  The idea now being discussed—a tax holiday, a low rate of 10 percent applied to repatriated profits (like the >$200 billion cash hoard Apple has in Ireland)—is, in Bill’s opinion, a bad one.
  • The “destination based” part of the DBCFT is also tricky. It is in the bill because the USA is now pretty much the only developed country using a worldwide, rather than territorial, base to calculate corporate tax obligations.
  • The US choice was based on a very defensible idea of fairness: if a foreign jurisdiction levies a 20 percent tax on the income of an American corporation’s operations in that country, the corporation should have to pay an additional 15 percent (to bring it up to the US rate of 35%) when those profits are returned to the firm.
  • BUT this puts US firms at a competitive disadvantage relative to a foreign company in that jurisdiction, if that company’s home country uses a territorial base, because the US firm ends up paying more. The US firm will have an incentive not to repatriate profits from that jurisdiction, retaining cash there perhaps in order to invest in that country instead of the USA.
  • Territorial taxation does make transfer pricing—the practice of setting intra-firm prices so that taxable profits are shifted to low-tax jurisdictions–a bigger problem.
  • Now, destination basing is like territorial basing except that it computes tax obligations from where a good is consumed rather than where income is earned.  Like a value-added tax (VAT), this method would have tax fall upon imported goods and services but not exports.  Unlike the VAT, businesses would be able to deduct expenses related to labor and rent, so that the taxable base now looks more like profit than value added.
  • Combining destination with cash-flow basing, you get a system that has the potential to be simpler, to encourage profit repatriation while putting US companies on even footing with competitors in foreign markets, and (depending on what happens to exchange rates), have a neutral to positive effect on the trade balance.
  • However, the politics of this ideal reform look difficult: Lots of interests are organizing against it.  It would also require tax accountants and attorneys to change the way they do their jobs.  The Senate, in particular, is likely to be hostile territory.  Orrin Hatch, Chair of Senate Finance Committee, is said to be mildly opposed, and several other important R Senators (e.g., Grassley) are more opposed.
  • When all is said and done, we are more likely to get a standard-issue Republican tax bill. My guess (Jim M.):  a corporate rate cut from 35 to 20-25; a personal top marginal rate cut from 39.6 to 35, maybe 30; an elimination of the estate tax; and some attention-getting sweetener for the “middle class” (R’s define this a households struggling on $250K- $1M).  There will be pressure on the CBO to use aggressive “dynamic scoring,” projections of the net impact that imply a big boost to economic growth.  If these don’t do the trick, expect a tax holiday for repatriated profits.
  • Going back to the three criteria noted above. The most tax-policy-wonkish Dems and Repubs could agree on minimizing distortions and horizontal equity, but they part company on vertical equity.  As the reform package evolves, unless the process is truly bipartisan (which R leaders say they welcome but will probably not follow in practice), this difference means that Dems and resistance groups would be right to distrust legislators whose philosophical guide is Ayn Rand.

[And here’s a recent take on the politics.]

 

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