Tax Day: President’s proposals to reward corporations and lower income voters; FCC to review, likely relax, media merger rules
Morning Brief: Newspapers have been traditionally prevented from buying broadcast properties in the same market of their circulation, but the new FCC chairman may end that rule, possibly leading to a new era in media consolidation
The president is scheduled to unveil his tax reform plans today, and if the rumors are true the idea will be to give away as much as possible in order to gain supporters. In addition to slashing the corporate tax rate from 35 percent to 15 percent, Trump also will propose increasing the standard deduction tax filers take in their annual tax returns.
The standard deduction cannot be used when a filer itemizes deductions, so it generally effects lower income tax payers.
Although Republicans are known for being deficit hawks when a Democrat is in the White House, they are also more than willing to alter the tax code when a Republican is in charge, and less concerned with the deficit.
The deficit generally grown tremendously during times of war (see chart above) or else in reaction to recession or depression. But the deficit also tends to rise significantly whenever tax cuts are enacted as, despite the claims of advocates, the tax cuts rarely lead to significant economic growth.
The Washington Post, Damian Paletta and Steven Mufson:
Trump to propose large increase in deductions Americans can claim on their taxes
Trump will call for a sharp reduction in the corporate tax rate, from 35 percent to 15 percent. He will also propose lowering the tax rate for millions of small businesses that now file their tax returns under the individual tax code, two people familiar with the plan said.
These companies, often referred to as “pass throughs” or S corporations, would be subject to the 15 percent rate proposed for corporations. Many pass throughs are small, family-owned businesses. But they can also be large — such as parts of Trump’s own real estate empire or law firms with partners who earn more than a million dollars annually. The White House is expected to pursue safeguards to ensure that companies like law firms can’t take advantage of this new tax rate and allow their highly paid partners to pay much lower tax bills.
Donald Trump’s payday: His proposed tax plan will likely make him a whole lot richer
While many tax experts are concerned that all of these cuts would significantly increase the budget deficit, Finance Committee Chairman Sen. Orrin Hatch, R-Utah, told the Associated Press that he’s “not convinced that cutting taxes is necessarily going to blow a hole in the deficit. I actually believe it could stimulate the economy and get the economy moving.”
“Now, whether 15 percent is the right figure or not, that’s a matter to be determined,” he added.
By contrast, historian and Republican policy adviser Bruce Bartlett wrote in The New York Times that dynamic scoring — the system used by some Republicans to argue that tax cuts pay for themselves — is “just another way for Republicans to enact tax cuts and block tax increases. It is not about honest revenue-estimating; it’s about using smoke and mirrors to institutionalize Republican ideology into the budget process. Why six Democrats joined the Senate Republicans in this move remains to be seen.”
Another winner in the new US economy looks to be media companies looking to consolidate their industries.
In the past, the Federal Communications Commission has looked skeptically at media companies looking to acquire additional properties within the same market, judging that market monopolies would be bad for competition and therefore bad for consumers.
But there is a new sheriff in town and he is far more pro-business, and far less concerned with consumer protections (if at all).
U.S. FCC to launch ‘comprehensive review’ of media regulations
Federal Communications Commission Chairman Ajit Pai on Tuesday said the top U.S. telecommunications regulator will launch a “comprehensive review” of regulations that restrict consolidation among media companies, potentially opening the door to a new wave of deals among broadcasters and newspapers…
…He vowed to “aggressively” modernize the FCC’s rules and “cut unnecessary red tape and give broadcasters more flexibility.”
He said the review will include revising the government’s’ media ownership rules, “including one dating back to 1975,” adding that the review will cover rules pertaining to traditional broadcasters, newspapers and cable and satellite carriers. Pai said the ownership review will be a “much more fact-based discussion.”
Revising or ending a cross-ownership ban could be a big win for newspaper companies and broadcasters. Many Democrats strongly oppose relaxing the rules, saying it would lead to major companies controlling a growing number of media outlets.
Media mogul don’t end up on the cover of popular magazines… unless something goes terribly wrong. Rupert Murdoch can be found this week on the cover of Variety, along with the headline Murdoch’s Mess.
But it is interesting to think about the journey Variety has been on. Founded in NYC in 1905, the weekly entertainment magazine launched Daily Variety to cover the film and TV industry in LA in 1933. In 1987, the properties were sold to Cahners where they became the flagship B2B properties for the company. Cahners became Reed Business Information… and then came the fall. Reed then blew it, bringing in ax wielders, and finally a playboy, to run their US empire, managing to destroy their business in the process. It was ugly to see.
Eventually Reed sold off, or closed, most of their US B2B titles, and Variety was sold to to Penske Media, who owns it today.
It is amazing to think of where B2B publishing was in 2000, and where it is today, thanks to incompetent media executives and private equity owners.
Murdoch Family Rushes to Put Out Fires at Fox News
During the past 10 months, Fox News and parent company 21st Century Fox have been dragged across the Rubicon by a parade of scandals, settlements and legal actions that laid bare the ugly side of the hard-charging culture fostered by Fox News founder Roger Ailes. The April 19 firing of longtime Fox News star Bill O’Reilly amounted to an even bigger sign of fundamental change than the ouster of Ailes last July. Both men were felled by sexual harassment allegations that became too numerous and too contemptible to brush aside. O’Reilly, 67, and Ailes, 76, have steadfastly denied any wrongdoing.
The whirlwind of events has left Fox News in a state of crisis — the feeling of being in a “slow-motion car crash,” in the words of one Fox executive — and cast a shadow on Rupert Murdoch’s legacy as a leader for allowing the situation to fester. At the same time, the hasty departures of Ailes and O’Reilly have allowed Murdoch’s sons, James, 44, and Lachlan, 45, to exert the corporate authority handed to them by their father in June 2015.