Category: Everything Else

This is an update to my previous comments here.

Today, I filed written comments in opposition to Maryland H.B. 61 that would exempt large amounts of retirement income from Maryland state income tax.   My initial comments, with all attachments, can be found here. Included as an attachment is an updated chart that was linked to in my previous posting.  I went over my calculations and found several to be incorrect.  The skew in favor of the wealthy was not as bad as I had previously calculated, but was still quite significant.

After I sent off my comments, the Tax and Policy Note on H.B. 61 was posted.  The calculations in that note will undoubtedly kill the bill since, over five years, there will be billions of dollars of revenue loss.  I then sent a second letter to the Committee.

In a sense, H.B. 61 is a prelude to the bill that the Governor has introduced, H.B. 342.  That bill also exempts broad swaths of pension income, but tempers the cuts somewhat by capping the exempt income to $50,000 and limiting the full benefit to individuals making less than $100,000.  In due course, I will be commenting on that bill as well.

The point is that the bulk of the incentives to save for retirement provide benefits that are weighted heavily toward the wealthy.

Last year, Maryland Governor Larry Hogan introduced into the Maryland General Assembly a bill entitled the “Retirement Tax Fairness Act of 2019.”  The bill had a five-year phase-in.  The fiscal note to the bill projected that over that five-year period the exemptions under the bill would cause a $178.6 Million loss in state revenue and an approximate additional loss of $111.15 Million to local jurisdictions.  (The fiscal note only calculates the loss to local jurisdictions in the first and last years of the five year period.  I calculated the approximate loss by dividing the loss to local jurisdictions in the last year, dividing it by the loss to the state in the last year, and then multiplying the result by $178.6 Million.)

The bill would have exempted from Maryland state tax income from (i) individual retirement accounts (“IRAs”) and annuities under IRC § 408, (ii) Roth IRAs under IRC § 408(a), (iii) simplified employee pensions under IRC § 408(k), and (iv) ineligible deferred compensation plans under IRC § 457(f).  Intuitively, I knew that exempting income from the first three categories was bad public policy.  After all, all of the growth in value over the amounts contributed in all three categories had already been tax-deferred.  And, except for contributions to Roth IRAs, even the contributions to these plans were made in before tax dollars. (I address IRC § 457(f) below.)  Thus, for the most part, the assets in these plans were derived from tax-free contributions and the appreciation in all of the plans had never been subjected to income tax.   I also assumed that the financially well-off held a disproportionate share of the assets in these plans.

The bill did not make it out of committee and died when the legislative session ended.  However, a bill containing similar provisions has been introduced into the 2020 legislative session.

IRAs and SEPs are widely believed to be the “pension for Everyman” (or, if you prefer, “Everywoman”).  I began to wonder: How skewed toward the wealthy are these plans?  I was quite shocked to find out that the answer was “Really, really skewed.”  I was able to locate statistics from the IRS based upon income tax returns filed for tax year 2016.  I have prepared a chart, available here, that shows the results of my calculations.  (The URL to the portal for the IRS source statistics is set forth on the chart.  I used three tables from the IRS.  I have uploaded the tables here, here, and here.)

This chart shows that in 2016 only 6.45% of all taxpayers made IRA contributions.  While 77.26% of all taxpayers were eligible to make such contributions, only 8.35% of those eligible actually made contributions.

By the end of 2016, only about 19.88% of taxpayers had money in IRAs or SEPs and the average market value in those IRAs & SEPs was only a little over $35K.  The real eye-popping numbers, however, are those that show how skewed toward the wealthy IRAs and SEPs are.

Only about 155,625 taxpayers reported income in 2016 of more than $1M.  They represent only 0.0762% of all taxpayers.  However, the market value of their  IRAs and SEPs was, on the average, $235,274 and represented 5.25% of the total market value of all IRAs and SEPs.   Taxpayers reporting income of over $100K represented 4.66% of all taxpayers.  Yet, they held 60.46% of the market value of all IRAs and SEPs.

Stated simply, as to IRAs and SEPs, the Maryland proposal would exempt from Maryland state and local income tax wealth that has, for the most part, already escaped taxation.  The primary beneficiaries would be the wealthy.

Oh, yeah, I promised a discussion of ineligible deferred compensation plans under IRC § 457(f).  I can’t find precise statistics as to these plans, but it is clear that the beneficiaries of these sorts of plans are already quite wealthy.

IRC § 457(f) provides a deferral of income under certain non-qualified deferred compensation plans operated by a state, political subdivision of a state, and any other tax exempt organization.  Who are the beneficiaries of such plans?  Highly paid personnel of colleges, universities, foundations, and hospitals such as executives, doctors, and, of course, college athletic coaches.  Not exactly a group in need of special tax breaks.  Unlike the bill introduced last year, the bill introduced in the current session excludes IRC § 457(f) plans from tax-exempt distributions.

The statistics concerning IRAs and SEPs open the question of whether the rules pertaining to exemption should be either repealed or radically modified.  While the IRA/SEP provisions are widely viewed as being egalitarian, in operation these provisions disproportionately benefit the wealthy.

Some years ago (it might be as many as fifty) I read an article in a scientific journal (it might have been Science, The American Scientist, or Scientific American), which I believe was written by a Nobel laureate in physics from Asia (perhaps India) – as you can see, at my age details get obscured. It was the scientist’s acceptance speech.

The author wrote of a conversation between two dragonfly eggs, attached to a reed below the surface of a lake. They noticed that eggs on other reeds floated to the surface and then disappeared, and they told each other that, when they rise to the surface they would get back to the other and tell it what lies above them.

And then, of course, one of them floats to the surface, shedding its egg sac, its wings unfurl, and it flies off, never to return to make good on its promise. That is, it is basically a parable about one’s mortality and hope for immortality.

Is there anyone who has heard of this, or how I might go about finding it? Google failed me in this search.

Marijuana tourists mean more visits to California emergency rooms. California agency eyes tax on marijuana by potency.

What happens to the Illinois weed black market when recreational marijuana goes legal Jan. 1st? As recreational pot is about to become legal in Illinois, Pritzker administration warns it will crack down on “bad actors” who affect medical cannabis availability. Advocates warn immigrants against buying legal weed in Illinois. Illinois emergency rooms prepare for legal marijuana. How marijuana prohibition blocks people of color from getting into the Illinois legal cannabis industry. Black Caucus chair again threatens vote on plan to delay Illinois recreational pot sales until July 1st. Legal recreational marijuana sales to begin Jan. 1 in Chicago Illinois after City Council ordinance fails. Weed smoking would be okay in Chicago cigar shops, hookah lounges and elsewhere, under Mayor Lori Lightfoot’s new plan. Rock Island County, Illinois States Attorney on recreational marijuana.

Hard times ahead for Michigan marijuana businesses.

Massachusetts marijuana stores allowed to resume sales of some vaping products. Dozens apply to open marijuana businesses in now-legal Maine. Rhode Island Senate leaders won’t support marijuana legalization in upcoming legislative session. 

Marijuana legalization petition approved in North Dakota. 
Don’t try to buy marijuana in Illinois and bring it back to Wisconsin. Wisconsin balks at legalizing marijuana. Oklahoma activists take first step to put marijuana legalization on state’s 2020 ballot.

Legalizing marijuana in Texas could adversely affect real estate. Kentucky lawmakers proposes bill to legalize marijuana, use money to fund public pensions.

Pennsylvania is using the vape crisis to try to legalize weed. New Jersey lawmakers vote to put marijuana legalization on state’s 2020 ballot. New Jersey marijuana legalization: Give voters a decriminalization ballot option. NYPD union chief claims that lax marijuana enforcement killed a college freshman. Cuomo hires Rhode Island official as marijuana czar.

Key Senate chairman lays out possible marijuana banking bill changes. GOP Congressman knocks his party for failing to pass marijuana reform.

Opioid prescriptions down in states with legal marijuana, study finds. Is marijuana linked to psychosis, schizophrenia? It’s contentious, but doctors, feds say yes. Generational divide proves to be a major factor in marijuana legalization debate.

From Canada legal high, a business letdown. Lesotho wants to send its legal marijuana all over the world. 

President Trump has now been impeached. Does he retain the power to pardon? Presumably, if he does, he could pardon his alleged co-conspirators-Giuliani, Fruman, Mulvaney, etc.-and thus allow them to lie with impunity without regard to the perjury laws.

A 2018 comment by D. W. Buffa on the Brookings site argues that the original intent of the Framers was to suspend the presidential power of pardon during any period in which the president was impeached. (The link to the Brookings original posting is here. Per the previous discussion on this blog concerning possible link-rot, I’ve pdf’d Buffa’s comments and posted them here.)

Buffa argues that the text of Article II, sec.2, wherein the president was given the “power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment”  acts as a bar to the president’s exercise of the pardon power while he is impeached. (Emphasis by Buffa.)

He does not rely merely on the text, however, but goes further and discusses the colloquy between George Mason and James Madison at the Virginia Ratifying Convention. Mason was concerned that:

If [the president] has the power of granting pardons before indictment, or conviction, may he not stop inquiry and prevent detection?

Madison saw the problem, but believed that the text of the Constitution provided an escape hatch. In responding to Mason, he said:

There is one security in this case to which gentlemen may not have adverted: if the President be connected, in any suspicious manner, with any person, and there be grounds to believe he will shelter him, the House of Representatives can impeach him; they can remove him if found guilty; they can suspend him when suspected, and the power will devolve on the Vice-President. Should he be suspected, also, he may likewise be suspended till he be impeached and removed, and the legislature may make a temporary appointment. This is a great security.

I have pdf’d a copy of the colloquy between Mason and Madison, highlighted the pertinent portions, and posted it here.

Contrary to the conclusion drawn in the Brookings posting is the conclusion set forth in Snopes from  Michael McConnell, director of the Constitutional Law Center at Stanford Law School, that “no basis for it whatsoever” exists for the proposition. [pdf of the Snopes posting.]

Buffa’s argument may not carry the day, but McConnell is clearly wrong in asserting that there is “no basis” for the proposition. That said, however, even under the Buffa formulation the House would have to affirmatively vote to suspend Trump’s pardon power and, as yet, has not done so.

Does anyone know of any additional scholarship on this issue?

I have posted the Executive Order signed by President Trump yesterday.

Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, and national origin in programs and activities receiving federal financial assistance. It does not prohibit discrimination on the basis of religion. The Executive Order directs that agencies charged with the enforcement of Title VI consider the non-binding definition of anti-Semitism adopted on May 26, 2016, by the International Holocaust Remembrance Alliance which provides that:

Antisemitism is a certain perception of Jews, which may be expressed as hatred toward Jews. Rhetorical and physical manifestations of antisemitism are directed toward Jewish or non-Jewish individuals and/or their property, toward Jewish community institutions and religious facilities.

The Executive Order goes on to provide that “the ‘Contemporary Examples of Anti-Semitism’ identified by the IHRA, to the extent that any examples might be useful as evidence of discriminatory intent.” I don’t know whether the Executive Order only means to include the examples currently identified or whether, if the list expands, subsequently added examples will be automatically incorporated into the Executive Order.

I hope to be able to add some additional comments this evening.

(Note: The link to the IHRA definition is to that organization’s website. Later today, I will put the definition on the server that I use for linking to documents and, one that has been accomplished, will edit this post.)

As those who read my posts know, one of the reasons that I post source documents is that I don’t think that people should have to rely solely upon a report summarizing a court opinion or a statute even if I am the author of the summary. Thus, I believe that the practice of linking to source documents should be the rule rather than the exception for all news media.

I am not alone here. Today, the Lawfare Blog announced that, going forward:

Lawfare’s readers [will have] direct access to the primary law underlying the issues discussed on Lawfare. Lawfare readers can now click on references to legal authorities cited in Lawfare’s articles to go to the full text of the opinion or statute, published on Casetext.

The full text of the announcement is here. (I have pdf’d the page and uploaded the pdf here. A perma.cc link to the page is here.)

While the larger newspapers, such as the Washington Post and the New York Times, have increasingly been linking to source material, their practices are not consistent. Smaller news outlets virtually never provide links. Yet, the marginal cost of downloading source material, storing it on a news outlet’s server, and adding a link to a story carried online is trivial. I rather suspect that the rationale is something like: “We’ve been doing it without links for [fill in the blank] number of years and we see no reason to change now.”

Let me both make a suggestion and ask a favor of RBC members. Whenever you see a story on a court case, a proposed bill, or a statute and there is no link to the source, send an email to the reporter. Ask the reporter to send you a link and suggest that a link to source material should be provided in all similar stories. Perhaps sooner or later they’ll get the idea.

Judge Jackson has denied the request for a stay in enforcing the House subpoena directed to Donald McGahn. I have posted a copy of the memorandum opinion.

One part of the opinion seems to me to clearly be directed at thwarting the use of appeals to simply delay the process. The Court distinguishes the McGahan case and, by extension, all of the other cases attempting to defeat subpoenas directed to the Trump Administration, from the opinion in Comm. on Judiciary, U.S. House of Representatives v. Miers (Miers
Stay Opinion), 575 F. Supp. 2d 201, 204 (D.D.C. 2008). At page 6 of the slip opinion, the Court notes:

Miers was a case of first impression, whereas, now, two federal district court judges have addressed the same legal issues concerning both the authority of the federal courts to entertain a disputed subpoena-enforcement claim brought by the House Judiciary Committee after a former White House Counsel refused to testify before Congress in response to a valid subpoena; and also the President’s assertion that senior-level presidential aides have absolute testimonial immunity. And both judges rejected the Executive branch’s contentions—a track record that had not developed at the time that the D.C. Circuit considered the stay motion in Miers.

And, on page 16 of the slip opinion, the Court states:

[T]he fact that the issuance of a stay of McGahn’s testimony would
impede an investigation that a committee of Congress is undertaking as part of an impeachment inquiry is yet another distinction between the instant circumstances and those that existed when the D.C. Circuit stayed the district court order in Miers.

Emphasis by the Court.

If the Courts continue to enforce the Congressional subpoenas and refuse to delay their enforcement, Senate acquittal will no longer be certain.

Apparently, Republican state legislators in Pennsylvania are attempting to rise to the level of ignorance of biology displayed by their counterparts in Ohio. Specifically, they have introduced House Bill 1890 that requires health care facilities that possess “fetal remains” to cremate or inter the fetal remains.

The proposed statute defines “fetal remains” to mean a “fetus expelled or extracted in the case of a fetal death.” The term “fetus” is not defined. Rather, the proposed statute defines “fetal death” to be the “expulsion or extraction from its mother of a product of conception which shows no evidence of life after the expulsion or extraction.” Thus, the statute ignores the difference between an embryo and a fetus. According to the Merck Manual, an embryo is not considered a fetus until “the end of the 8th week after fertilization (10 weeks of pregnancy).”

At least one study has calculated that “15% of the documented pregnancies ended in first trimester miscarriages per pregnancy.” Further, “current research showing about 50% to 60% of miscarriages are the result of random fetal chromosomal abnormalities incompatible with life.” (Endnotes omitted.) Somewhat different statistics are presented by the National Institutes of Health which finds that “[i]t is estimated that as many as 26% of all pregnancies end in miscarriage and up to 10% of clinically recognized pregnancies. Moreover, 80% of early pregnancy loss occurs in the first trimester.” (Endnotes omitted.)

Pennsylvania House Bill 1890 is nothing more than a ham-handed attempt to impose specific religious beliefs. It simply ignores the biology of human reproduction. As this paper finds:

A synthesis of many large-scale studies from the last 15 years unambiguously confirms the Wood-Boklage-Holman hypothesis that abortion is an intrinsic and overarching component of human reproduction. It is the most common outcome of conception across a woman’s lifetime and the predominant factor controlling age-specific variation in human female fertility. To reproduce, a human female cannot forgo a high risk of abortion, and to have a large family it is virtually impossible to avoid multiple abortions. Modern birth control with access to elective abortions, markedly reduces –rather than increases– the lifetime number of abortions a woman produces.

Note: As used in the paper the term “abortion” refers to any any early termination of a pregnancy whether by miscarriage or by intention.

Oh, yeah, one other thing. The proposed bill is unlikely to raise GOP support among women.