Published January 26, 2017
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IRS HIRING 4,000 NEW AGENTS AND STILL PLANNING TO SPEND $303 MILLION MORE TO HELP ENFORCE HEALTH CARE LAW
STEVE FORBES: Sure David it's a power grab. So even if the ObamaCare gets thrown out those agents will be there to harass us. What we need as a nation is fewer tax collectors and more entrepreneurs. We need tax simplification and these IRS agents should be able to contribute to the economy instead of sucking the blood out of it. So this power grab... stop it.
RICK UNGAR: Well the problem is that the 4,000 agents the IRS is seeking are not to just enforce ObamaCare, that's just not correct. They are looking for 4,000 new agents and here is an interesting little factoid-they just finished doing the audit on how successful they have been with agents and they found out that every dollar they are spending on enforcement on the IRS we are getting back $4.30, not a bad deal. The 300 million by the way is to create systems, mostly to bring effect to the tax credits that ObamaCare would provide if ObamaCare survives.
ELIZABETH MACDONALD: After this political caravan moves on and if health reform does turn into a great pumpkin, the IRS would still have the agents. I've talked to them for years. They don't want to have to administer health reform; they would rather jump into a pool of live hair dryers because this thing is such a political hot potato. The IRS already has a difficult time administering the federal tax codes. The issue is that it is a big privacy issue for the IRS. They get details on family plan; share the details of your family health plan with state insurance exchanges, with employers, with insurance companies, and other government insurance programs. The IRS does not want to be in that position to have to be doing those types of things.
MORGAN BRENNAN: Going back to the point EMAC made about the fact that they don't even have enough agents to support the tax code, that's part of why they are hiring 4,500 agents/ Last year we saw about 5,000 agents laid off, and since then the IRS has said they are having back logs and sending out refund checks to people who have filed their taxes already and they are having a hard time collecting hundreds of billions of dollars in taxes that are owed to the government. So that's something that these agents are going to help collect.
MIKE OZANIAN: This is a theme that has been reoccurring in the Obama administration it's the growing power of big brother. We might as well hire 20,000 agents because Washington gets such a great bang for the buck. What you need to do is make the tax code simpler so people and companies don't have to waste so much time and money trying to figure it out. That's how you will really in vigor the economy, not by hiring these tax guys.
RICH KARLGAARD: ObamaCare is not dead yet, there's still a 40 percent probability it will get through. The irony here of course is that President Obama repeatedly assured Americans that there will be no new taxes surrounding his healthcare program, so why expand the IRS? So assuming that ObamaCare does go down there is just going to be more harassment of the one group that this administration just doesn't like, and that's small business owners. They assume that every small business owner is a tax cheat.
IS THE RECOVERY HERE?
A new study says 42 percent of CEOs plan to hire more workers over the next six months. And nearly half plan to spend more of their cash. This as the stock market is coming off a very strong first quarter.
RICK UNGAR: Sometimes David, you just have to bite down hard on the bullet and accept the good news, even when it doesn't fit the political narrative. Things are getting better and people know it. And you know what else that survey showed that I liked? Not only are they spending money on hiring people, they are going to be spending money on machinery, they are going to spend money on capitol assets this is good news. Can it go wrong? Of course it can but everybody knows it, it's getting better... sorry!
STEVE FORBES: Good recovery? No. This is the worst recovery since World War II. Pathetic. We should have had this kind of growth after the recession officially ended. We know what's holding the economy back, binge spending, uncertainty about taxes tsunami of new regulations coming. It's like a car increasing its speed from 20 miles per hour to 40 miles per hour ain't going to win you the Indy 500.
VICTORIA BARRET: No it isn't. I'm not sure which bullet Rick things I should be biting because if you look at the same CEO survey a year ago 52 percent of CEOs said they would be hiring. 52 percent is higher than 42 percent. That aside, new job growth is going to come from small business. That's where we still have a lot of issues. Lending is not flowing as freely as you want it to be. I think we still have a lot of issues to work out. That's the bullet I bite.
RICH KARLGAARD: Well yeah that's the history of the United States and the land of the entrepreneurs. The stock market is up because publicly traded companies, large global facing companies are doing pretty well right now and they have a lot of cash to work with. But Victoria is exactly right. The small business sector is still struggling, there is great hostility as we spoke about in the previous segment towards the small business sector and they are not hiring, that's why we still have unemployment at 8 percent.
MIKE OZANIAN: We are not in a recovery at all. Things have gotten worse as far as the standard of living. Real GDP per capita has declined the last two months we have seen consecutive declines in after tax incomes, so people will have less money-not more to spend. Our standard of living has declined over the past year. Stock market prices has gone up is because the fed has increased the money supply at a tremendous pace-just 10 percent in the past year alone. The big institutions aren't going to put that money into bonds that have very low yields or their bank accounts which aren't yielding anything, they are going to put it into stocks, and that's what has been happening.
JOHN TAMNY: I think by definition we are better off. Recessions are cured if they cleanse all the bad ideas and the misuses of labor from the economy. We would be wise to curb our enthusiasm. As I see it, the republicans and democrats have robbed us of a big recovery when they bailed out banks and car companies that should have been allowed to go bankrupt. Even worse, we have a treasury and fed that has devalued the dollar and keeping industry rates artificially low. You're not going to have the investment against the weak dollar and you're not going to have a capitol reformation because of the low interest rates to get a Reagan '80s or Clinton '90s style boom.
DO LOTTERIES MAKE AMERICANS POORER?
MIKE OZANIAN: These lotteries suck a lot of money out of the economy, particularly low income people who pay the highest percentage of their income to these lotteries. The government takes its share out to run its lottery bureaucracy before it even makes the payout. The odds of winning are so miniscule you're never going to get a return on your buck as far as the economy is concerned.
MORGAN BRENNAN: Leave the lotto alone. It gives people a sense of hope and the truth of the matter the matter is about a 1/3 of that money goes towards education coffers for different states. So it's not a totally bad empty investment. Those being said, if you really want to talk about lotto tickets making poor people poorer, look at the larger trend. Scratch offs are something that gives people hope, it's a buck. If you really want to take care of poverty look at welfare and education reform.
VICTORIA BARRET: It's a pretty ugly system when you think about it. Education gets 30 percent is a good outcome, and across states it varies, it could be 20 percent. There is a huge chunk of administrative costs that goes into this and it's in everyone's interest to make pile larger and larger meaning more people are going to sign up and buy tickets. Its ugly, but Mike do you regulate it? Do you say this is illegal? No!
ELIZABETH MACDONALD: Let's scratch the hype to risk as sounding as cranky as Fred Mertz from I love Lucy. The issue is that the poor actually do pay a voluntary regressive tax. I think Mike is absolutely right. And you get what? 1 in 176 million odds of sharing the prize with somebody to join the 1 percent. The issue is states are using it to close their budget deficits overall 103 billion bucks in deficit. With this take, there's 20 percent that's going to go towards closing it. They are going to wipe out their deficits. It's not just education that it goes to; it goes to infrastructure and government.
STEVE FORBES: No they are bad -- it's reverse Robin Hood. Take from the poor give to the ultra rich government. In terms of education we spend more on education. When the lottery started in the 1960s was bad or worse than it was 40 or 50 years ago. Fine to have the money instead of going to gangsters, to politicians, I think put it in the stock market even the worse stock market than the Great Depression gives you a better return that these lotteries do.
MEGA STOCK WINNER
ELIZABETH MACDONALD: Cummins Inc. (CMI)
MORGAN BRENNAN: Brookfield Infrastructure Partners (BIP)