Family Separation for the Children of Undocumented Workers - from illegal immigrants to tax cheaters

Imagine a political group gets into office and they are as upset about undocumented workers and businesses as Trump supporters are about undocumented workers. The difference being, this group is upset about a failure to file or pay taxes. 

These people are upset about tax cheaters in the same way that Trump supporters in 2016 were upset about illegal immigrants. What they didn't realize, though, is that the government they voted in would decide to discourage tax cheaters through a policy of family separation. Children of tax cheaters were essentially incarcerated, left in lock-down 23 hours a day. Some of the children actually adopted out.

It seems that these folks outraged at tax cheaters have two choices once they see this. One is to simply say, "Yeah. That is spot on. Take their children." The other is to be outraged, shocked that this new government would systematically separate families as punishment for cheating on taxes. The relevant question at that point is whether undocumented (as in did not file any or any accurate tax records) workers deserve a punishment this harsh and whether they'll vote again for this administration now that they know how far they'll take things.

This is the question before Trump supporters who are as equally outraged at undocumented workers (who don't have proof of residency or citizenship) but still feel that systematically separating families as a discouragement is even more evil than having someone in the country willing to work in our fields or kitchens for lower than minimum wage. The question is, Do you want to be on the side of an administration that will perpetuate this kind of cruelty on the most helpless people within our borders? Children who not only don't understand our system but don't even speak our language and for whom the only clear reality is that they've been torn from their mother? Because in 2016, you may not have properly understood why Trump was working so hard to convince you that Mexico was sending us rapists and murderers. Now you do. Good people like you can be made to support cruelty only if you believe it is just retribution for egregious behavior. Now you know that this was to get your support to be cruel to people who are born so inferior that they don't even deserve the comfort of a mother. These people are so evil that they don't deserve family. Now you know that the point was to be cruel to children who are vulnerable, confused and traumatized. If you find that more outrageous than someone crossing the border in the hopes of a better life for them and their children, you have a simple way to stop such behavior: don't vote for the man who has done this and still thinks he has done nothing wrong. Don't vote for Trump.

And I know that the Trumpbros are going to jump on this and say, "But under Obama this happened." Yes. With legal proceedings and detentions, this kind of thing happens. There is a difference between the rare case that inevitably falls out in the midst of managing borders and systematically separating children as Trump, Stephen Miller and Jeff Sessions intended. There is a difference between the rare case and systematically warehousing thousands of children in converted Walmart stores.

So think about the policies that matter to you and who deserves punishment. Whose behavior you think most undermines the economy you think we're trying to build. Tax cheaters? Illegal immigrants? And then ask whether the proper punishment for such undocumented workers is taking their children from them. Because if you voted for Trump in 2016 and then this happened, you can honestly say that you didn't see this coming. If you vote for Trump in 2020, you have to own this and say that someone trying to better themselves without having all the proper paperwork - as illegal immigrants and tax cheaters do - deserves to have their children taken from them as punishment. You have to clearly state that you support cruelty to the children of people who cut corners to make a better life for those children. Perhaps I'm a starry-eyed optimist but I don't believe nearly as many people will support that kind of cruelty as believe that undocumented workers of any kind is an issue.

CBC article here 
Trump's family separations at border played out 'exactly how it was designed to': journalist Jacob Soboroff

The Most Important - and Largely Uncovered - Lesson from the New York Times' Article About How Trump Got His Wealth

This New York Times story about tax schemes used by the Trumps is a story of 3 things, only 2 covered by the media.
link:
https://www.nytimes.com/interactive/2018/10/02/us/politics/donald-trump-tax-schemes-fred-trump.html?smid=tw-nytimes&smtyp=cur

1. It clarifies how dependent Trump is on his father for his wealth. His father gave him over $400 million in various ways (Trump was a millionaire before he was out of grade school.) Trump is definitely not self-made and his net worth is not much different than what it would have been had he simply invested his life time of gifts into a stock index fund.

2. It itemizes the various ways the Trumps cheated to avoid taxes. A massive amount of tax. In one instance, they turned about $900 million worth of real estate into an estimated value of $40 million in order to avoid millions and millions and millions in tax.

All that the media covered. What they don't cover is item 3.

3. This is really a story about origins. Trump became who he is because he hasn't known normal consequences. The most succinct way to illustrate how his father covered his bet is this: Trump owed a bond payment on his failing casino in 1990. He did not have the money. Fred Trump - his dad - sent a trusted employee down to the casino to buy $3.5 million worth of chips simply to infuse Trump's business with enough cash to enable him to make the bond payment. (And even that was not enough; he also wrote a check that day to Donald for another $150,000.) Donald could take risks knowing that his father would cover that risk, do what he could to protect his favorite son. A pundit once quipped of George W. Bush that he was born on third base thinking that he hit a triple; Trump, by contrast, stands triumphant at the plate simply because his dad owns the stadium.

We teach our kids consequences. They learn that if they are rude to someone, they could lose them as a friend. They learn that if they spend all their money for the week by Wednesday they are penniless until Friday. We do things and sometimes good things follow and sometimes bad. We use that feedback to adjust who we are, to learn how to survive or even prosper within our world.

Trump never had to do that. His father protected him from normal feedback and thus normal learning. Trump never had to adapt to the world; he had money enough that it adapted to him. Here, from the story, is how Donald was raised:

By age 3, Mr. Trump was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. By the time he was 17, his father had given him part ownership of a 52-unit apartment building. Soon after Mr. Trump graduated from college, he was receiving the equivalent of $1 million a year from his father. The money increased with the years, to more than $5 million annually in his 40s and 50s.

For our purposes, the biggest problem with this is that it insulated Trump from normal consequences. He could be rude. He could be crude. He could spend money lavishly or invest it recklessly. And in the morning he would still have more income than 99% of the adults around him.

Fred Trump is now dead and gone. He's not around to cover his son's bad bets. Who now does? I think it is us, the American people. Donald has yet to suffer any negative consequences for anything he has said or done. We already do and we're not even done with the payments.

Trump Hikes Taxes - How Tariffs Really Work and Why They Rarely Do (work, that is)

Here in mid-September, Trump just announced tariffs on $200 billion in goods from China.

This is a tax on American consumers that works out to about $60 per American. Americans will pay that much more for items.

Who gets that money? American companies that have already proven themselves incapable of competing. American companies who need protection in the form of tariffs.

There are times when it makes sense to have trade protection in the form of tariffs. If your national policy is working to move from an agricultural to an industrial economy, or from an industrial to information economy it makes sense that you may want to protect some sectors or companies from foreign competition as they establish themselves against global competition. For awhile.

Companies that benefit from trade protection have a few options about what to do with the added revenue. They can increase the wages of hard-hit employees who have been competing against cheaper foreign labor. They can use the extra revenue to invest in new capacity or technology so that they are more competitive. Or they can payout the profit to stockholders and executives in the form of bonuses, using this subsidy from American consumers as a reward for having the political clout to do what they could not do through the market.

Tariffs are essentially a tax but not a tax that go to the government. Government spending can actually help displaced workers by funding unemployment and retraining. Government spending can finance infrastructure building that makes regions more competitive because of better rails or roads or cheaper energy or water. Government spending can go into the basic research that companies can develop into products.

Apple is now the most valuable company in the world, worth more than a trillion. It's most profitable product is the iPhone. The iPhone represents product development that incorporates research advances like touchscreen, satellite, and small chip technology originally funded by government research. (This is well documented in Mariana Mazzucato's The Entrepreneurial State.) Government research can lead to breakthroughs that not only help citizens but that can be the basis for new products that companies develop into highly profitable markets. A few billion in research spending can help to create trillions in value.

Tariffs don't help to finance basic research, infrastructure, education, or the creation of new industries and companies. Tariffs often subsidize companies that have not kept up, doing more to reward executives who have made campaign contributions than executives who have invested in the future. Within the last year, the GOP passed a tax cut that makes it harder to do any of these things. With Trump's new tariffs, it has just reversed that tax cut for the typical American and will now give that tax or tariff revenue to uncompetitive companies instead. 

The Economic Effects of the Republican Tax Plan - Punishing Work and Rewarding Luck

Although the Republican tax plan has been - and still is - evolving it has recently included changes that would tax innovation in two forms. One, grad students who receive a scholarship will be required to pay income tax on it's value. If you get a $45,000 a year scholarship to Stanford, you would have to report that as income. Two, any stock options granted to employees would be taxed at the point they are granted, not - as they are now - taxed at the point when they are exercised. As it is, this tax will make it harder for people to get PhDs and to launch startups. What do these two things have in common? They threaten the status quo and can unleash gales of creative destruction.

The bad news about new ideas, technologies and businesses that come out of grad school and startups is that they can overturn existing industries. Your hotels could be undermined by Airbnb. Your oil well can be undermined by affordable solar panels. 

There are two groups who are threatened by the gales of creative destruction. One group is the elites who own existing hotel chains, oil wells and other assets whose value can be eroded by the new. The other group are the folks who work for these elites and share their concern that innovation could disrupt their livelihood, people who may lose their coal mining jobs.

So startups and grad students are being taxed more but the Republican plan is advertised as a tax cut. So, who pays less? The folks who will get the most dramatic tax cut are the folks who inherit. Current law is already ridiculously generous to folks who inherit: if the value of the estate you inherit is $5.45 million, you don't have to pay a dime in inheritance tax. This new plan will double that. 

Republicans are rewarding people who resist change by simply inheriting and punishing people who are encouraging change. This is not particularly surprising for social conservatives, people who see as a threat most change from the world they learned.

I recently put out a survey to ask this question: 

Put aside for a moment whether you think that the highest marginal tax rate should be 5% or 95%. This question is about something else. Which of the following do you think should be taxed at the highest marginal rate?
- Income tax: I think money you make from your job, your labor, should be taxed at the highest rate
- Capital gains tax: I think that money you make from your investments should be taxed at the highest  rate
- Inheritance tax: I think the money you get from inheritance should be taxed at the highest rate
- Consumption tax: I think the money you spend (on groceries, transportation, housing, clothes, entertainment and other consumption goods) should be taxed at the highest rate

The responses were as follows:

My respondents clearly thought that the highest marginal tax rate should be applied to the income that came with the least personal effort: inheritance tax. This is the opposite of what Republican leaders believe, proposing a plan that levies the highest tax on the people who apply the most effort: the people who are out earning an income rather than leaving that job to their investments or grandparents.

Taxing inheritance the highest isn't just about fairness. If we want a society where everyone has an incentive to work, we would want a society where work is taxed less than inheritance and one person isn't free of tax on the first $10 million they inherit while another person has to pay income tax as soon as she makes more than $10,000. That is partly about fairness but it is also just common sense: we want everyone to help with the work.

The older I get the more confident I am about what makes for good policy and the less confident I am about what makes for good politics. On the face of it, a Republican tax plan that hikes up the deficit by an additional $2 trillion, gives tax breaks to rich grandkids, and discourages entrepreneurship and education would seem like taping a sign to your back that says, "Vote for the other guy." Who knows, though. It might just be that the American people will fall in love with a plan that helps to discourage the progress that so many find disruptive.