http://www.zerohedge.com/fullrss2.xml/component/option%2Ccom_docman/Itemid%2C200023/gid%2C397/BoomBustBlog/BoomBustBlog/BoomBustBlog/BoomBustBlog/2009/2009/07/2009/2009/2009/07/2009/07/2009/2009/2009/2009/2009/07/2009/2009/2009/07/2009/07/2009/07/2009/07/news/t en Treasury Forecasts Tax Reform Will Lead To Longest Period Without Recession In History http://www.zerohedge.com/news/2017-12-11/treasury-forecasts-tax-reform-will-lead-longest-period-without-recession-history <p>One week ago, in its latest assessment of the current state of tax reform in the aftermath of the Senate's passage of the tax bill, <a href="http://www.zerohedge.com/news/2017-12-03/heres-whats-it-goldman-explains-all-you-need-know-about-current-state-tax-reform">Goldman analysts calculated </a>that while growth impact from tax reform had increased fractionally <strong>to around 0.3% in 2018 and 2019 </strong>"reflecting the slightly larger amount of tax cuts in the Senate plan following revisions, and our expectations regarding the eventual compromise", it expected a very modest - if any - boost to US economic growth from tax reform.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/gstax8.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/gstax8_0.jpg" width="501" height="317" /></a></p> <p>Today, in a <a href="https://www.treasury.gov/press-center/press-releases/Documents/TreasuryGrowthMemo12-11-17.pdf">report prepared by the US Treasury </a>- which as reminder is run by former Goldmanite Steven Mnuchin - and which was meant to bolster the case for the economic growth to be unleashed by the Trump tax cuts, and distract from the spike in deficit funding, the Treasury’s Office of Tax Policy (OTP) calculated that - somehow - <strong>the Senate's version of tax cuts will result in 2.9% real GDP growth rate over 10 years.</strong></p> <p>This 2.9% GDP growth scenario compares to a baseline of previous Treasury projections of 2.2% GDP growth. Treasury "<em>expects approximately half of this 0.7% increase in growth to come from changes to corporate taxation, while the other half is expected to come from changes to pass-through taxation and individual tax reform, as well as from a combination of regulatory reform, infrastructure development, and welfare reform as proposed in the Administration’s Fiscal Year 2018 budget."</em></p> <p>This Treasury also claims that this 0.7% increase in growth <strong>results in an increase in tax revenues during the 10- year period of approximately $1.8 trillion. </strong></p> <p><strong></strong>And this is where the magic of fairy-tale forecasts comes in because <strong>adding this $1.8 trillion of incremental revenue to the static current law score of -$1.5 trillion results in total receipts over the 10-year window increasing by $300 billion.&nbsp; </strong>In other words, the Trump tax cuts will not only not add to the deficit but will reduce debt by $300 billion, according to the Treasury. </p> <p>Conveniently, the Treasury caveats that "these increased receipts are primarily collected in the last five years, as full expensing creates growth in early years but results in a deferral of collection of taxes."</p> <p>It is unclear what is more ridiculous: that the propose gift to corporations will not only pay for itself but lead to a perpetual engine of trickle-down economic growth, one which has been refuted in every single instance in history, or that the Treasury expects the US economy to continue for another decade without a recession, <strong>which in 2027 result in an 18 year period of continuous growth since the last official recession ended in 2009, the longest period without a recession in history. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/TSY%20tax%20forecast.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/TSY%20tax%20forecast_0.jpg" width="500" height="329" /></a></p> <p>Of course, when the next recession hits no later than 2019 when the yield curve will be steeply negative and crushing the financial sector, government tax revenues will plunge leading to a blowout in government borrowing, forcing the Fed to launch QE4 as its monetization of the surging deficit will be critical in a world in which every other central bank will be dealing with its own issues at home. </p> <p>As parting humor, the OTP notes the following:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>We acknowledge that some economists predict different growth rates. OTP projects that at approximately 0.35% of incremental annual GDP growth, Treasury tax receipts would generate approximately $1 trillion of incremental revenue. Neither JCT nor Treasury has released a score showing increased tax receipts from the House plan, though we would not expect the results to be materially different.</p> </blockquote> <p>We will be happy to revert to this post some time in 2027 when total US government debt is between $35 and $45 trillion, and when as the CBO correctly predicted, total US debt/GDP will be in its exponential phase.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/jpm%20debt%20cbo%20forecast.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/jpm%20debt%20cbo%20forecast_0.jpg" width="500" height="315" /></a></p> <p>The Treasury's 1 page "analysis" is below (<a href="https://www.treasury.gov/press-center/press-releases/Documents/TreasuryGrowthMemo12-11-17.pdf">link</a>):</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/TSY%20tax%20details.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/TSY%20tax%20details_0.jpg" width="500" height="658" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1299" height="640" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/tax%20cycle%20teaser.jpg?1513012171" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/treasury-forecasts-tax-reform-will-lead-longest-period-without-recession-history#comments Business Economy Economy of the United States Monetization National debt of the United States Political debates about the United States federal budget Presidency of Barack Obama Presidency of George W. Bush Presidency of Ronald Reagan Recession Senate Steven Mnuchin Treasury’s office of Tax Policy U.S. Treasury United States United States federal budget US Federal Reserve US government Yield Curve Mon, 11 Dec 2017 17:11:37 +0000 Tyler Durden 608930 at http://www.zerohedge.com "Can't Rule Out $100,000" - Taleb Warns Futures Traders "No Way To 'Properly' Short Bitcoin Bubble" http://www.zerohedge.com/news/2017-12-11/cant-rule-out-100000-taleb-warns-futures-traders-no-way-properly-short-bitcoin-bubbl <p>Following Mike Novogratz&#39;s earlier comments about the launch of Bitcoin futures,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;The market trades like it wants to go up, not down...</strong></em></p> <p>&nbsp;</p> <p><em><strong>We are in a speculative mania and my sense is we are still fairly early.&rdquo;</strong></em></p> </blockquote> <p>Infamous &#39;Black Swan&#39; theorist and tail-risk-hedger, Nassim Nicholas Taleb has a warning for the &#39;no brainer&#39; traders hoping to use Bitcoin futures to bet against the &#39;bubble&#39;...</p> <p>In his tweet, Taleb said,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>No, there is NO way to properly short the bitcoin &ldquo;bubble&rdquo;. </strong>Any strategy that doesn&rsquo;t entail options is nonergodic <em><strong>(subjected to blow up).</strong></em> Just as one couldn&rsquo;t rule out 5K, then 10K,<strong> one can&rsquo;t rule out 100K</strong>.&rdquo;</p> </blockquote> <p>Taleb&#39;s view was reinforced by Cybersecurity pioneer John McAfee in a tweet earlier saying:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>Those of you in the old school who believe this is a bubble simply have not understood the new mathematics of the blockchain, or you did not care enough to try.</strong></p> <p>&nbsp;</p> <p>Bubbles are mathematically impossible in this new paradigm. So are corrections and all else.&rdquo;</p> </blockquote> <p>For now prices are holding gains...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_btcf.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_btcf_0.jpg" style="width: 600px; height: 313px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="970" height="506" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171211_btcf.jpg?1513011958" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/cant-rule-out-100000-taleb-warns-futures-traders-no-way-properly-short-bitcoin-bubbl#comments Alternative currencies Bitcoin Bitcoin Black Swan Cryptocurrencies International relations John McAfee Nassim Nicholas Taleb Non-interventionism Taleb The Black Swan: The Impact of the Highly Improbable Mon, 11 Dec 2017 17:06:51 +0000 Tyler Durden 608929 at http://www.zerohedge.com UK Heating Gas Prices Spike To 2013 Highs Amid Weather "Yellow Warning" http://www.zerohedge.com/news/2017-12-11/uk-heating-gas-prices-spike-2013-highs-amid-weather-yellow-warning <p>The<strong> U.K.’s Met Office issued a ‘yellow’ warning</strong> after dumps of snow over the weekend disrupted travel, sending the price of <strong>same-day heating gas prices to their highest since 2013...</strong></p> <p>The average temperature in the U.K. for the rest of Monday <strong>will be 1 degree Celsius (34 Fahrenheit), compared with a 10-year average of 5.2 Celsius, </strong>according to Bloomberg’s weather model.&nbsp;</p> <p>Bloomberg also notes that <strong>supplies&nbsp;in the system could plunge 11 percent by the end of the day,</strong> according to network manager National Grid Plc. Supplies from the&nbsp;Bacton terminal&nbsp;in Norfolk are below the 10-day average after Total SA&nbsp;said&nbsp;exports from the Elgin Franklin field that feed it have been reduced by about 60 percent from normal levels, potentially until Wednesday evening. Flows into the&nbsp;St. Fergus terminal&nbsp;in Scotland also plunged. Storage supply picked up some of the slack, rising to the highest since Dec. 1.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_heat.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_heat_0.jpg" width="600" height="287" /></a></p> <p><strong>“Whilst the weather-related heating demand was expected, the reduction in flows via a number of terminals was not,”&nbsp;</strong>Nick Campbell, an energy risk manager at Inspired Energy Plc, said by email.</p> <p><strong> “Therefore this has left the system tight and battling to pull in more gas from the continent.”</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="924" height="442" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171211_heat.jpg?1513011231" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/uk-heating-gas-prices-spike-2013-highs-amid-weather-yellow-warning#comments Continuum mechanics Fahrenheit Heat transfer Mechanics Physics Temperature Thermodynamics U.K.’s Met Office Mon, 11 Dec 2017 16:55:34 +0000 Tyler Durden 608928 at http://www.zerohedge.com Interactive Brokers Allows Long-Only Bitcoin Futures Trading (At 50% Margin) http://www.zerohedge.com/news/2017-12-11/interactive-brokers-allows-long-only-bitcoin-futures-trading-50-margin <p>Following the 'successful' launch of Bitcoin futures overnight, Interactive Brokers - whose founder had been adamantly against the CME/CBOE product over risk concerns - has <strong>enabled clients to trade the crypto-craziness on its platform... but with some notable constraints</strong>.</p> <p>Interactive Brokers began offering clients the ability to trade bitcoin futures at the start of trading on the Cboe Futures Exchange (CFE) on Sunday night, December 10th, 2017.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“Interactive Brokers was on the buy side of the low print of 14,710,”</strong> said Thomas Peterffy, founder, Chairman and CEO of Interactive Brokers. </p> <p>&nbsp;</p> <p>“A Registered Investment Advisor on the Interactive Brokers platform purchased two March contracts in the first minute of trading.”</p> </blockquote> <p>However, as Interactive Brokers explains, there are some notable constraints...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Due to the extreme volatility of cryptocurrencies, <strong>clients will be unable to assume a short position.</strong> </p> <p>&nbsp;</p> <p>In addition, <strong>only limit orders will be accepted.</strong></p> <p>&nbsp;</p> <p> <strong>IBKR’s margin requirement on long positions will be at least 50%.</strong> </p> <p>&nbsp;</p> <p>The company will continue to monitor concerns surrounding the market's ability to process bitcoin futures risk.</p> </blockquote> <p>Billionaire crypto fund manager Mike Novogratz was on tape this morning, speaking positively about the launch of Bitcoin futures,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>“The market trades like it wants to go up, not down...We are in a speculative mania and my sense is we are still fairly early.”</strong></em></p> </blockquote> <p>For now, Bitcoin futures prices are holding their gains, outperforming spot Bitcoin and spot Gold...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_gold.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_gold_0.jpg" width="600" height="404" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1683" height="1134" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171211_gold.jpg?1513010678" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/interactive-brokers-allows-long-only-bitcoin-futures-trading-50-margin#comments Alternative currencies Bitcoin Bitcoin Business CBOE Cryptocurrencies Economy of the United States Finance Futures contract Futures exchange Interactive Brokers Money Thomas Peterffy Volatility Mon, 11 Dec 2017 16:45:57 +0000 Tyler Durden 608927 at http://www.zerohedge.com Stellar 3Y Auction: Highest Bid To Cover Since Sept 2015, Foreign Demand Surges http://www.zerohedge.com/news/2017-12-11/stellar-3y-auction-highest-bid-cover-sept-2015-foreign-demand-surges <p>Unlike last month's ugly 3Y auction, today's just concluded sale of $24 billion in 3 year paper was stellar, stopping through the When Issued 1.934% by 0.2bps, a surge in buyside demand as the Bid to Cover jumped from 2.76 to 3.15, the highest since September 2015, while Indirect Bidders took down the most since August. </p> <p>The details: the high yield was 1.932% vs six previous auction average 1.572%, it stopped through the WI of 1.394%. </p> <p>The Bid-to- cover was 3.15, up from 2.76 in October, and well above the previous six auction average of 2.88. </p> <p>Dealers were awarded 33.6%, slightly below the six previous auction average 35.2%, and down from 37.5% last month, while Direct bidders took down 7.4%, below last month's 9.0%, and down from the six previous auction average 8.8%.&nbsp; Finally, foreign central banks and reserve managers, i.e., Indirect bidders were awarded 59.0% vs the 6auction average 56.0%, and up from 53.5% last month. It was also the highest Inidrect award since August 2017.</p> <p>Overall, a very solid auction and one which sets the stage for today's second, benchmark bond auction of 10Y paper set for 1pm.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/3Y%20Dec%202017.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/3Y%20Dec%202017_0.jpg" width="500" height="319" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1175" height="749" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/3Y%20Dec%202017.jpg?1513010570" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/stellar-3y-auction-highest-bid-cover-sept-2015-foreign-demand-surges#comments Auction Auction theory Auctions Bidding Bond Central Banks Foreign Central Banks High Yield Human Interest Marketing Microeconomics Shop at Bid Mon, 11 Dec 2017 16:44:22 +0000 Tyler Durden 608926 at http://www.zerohedge.com CNN And WaPo Working On 20-40 Sexual Misconduct Stories http://www.zerohedge.com/news/2017-12-11/cnn-and-wapo-working-20-40-sexual-misconduct-stories <p><em>CNN</em> and <em>Washington Post</em> are working on exposing "20-30 congressional members" for sexual harassment, claims Michael Trujillo, former LA City Commissioner and Hillary Clinton's California Field Director during her 2008 bid for the White House.&nbsp;</p> <p><em><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/photo.JPG" width="400" height="400" /><br />Michael Trujillo</em></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">SOURCES: <a href="https://twitter.com/CNN?ref_src=twsrc%5Etfw">@CNN</a> and <a href="https://twitter.com/washingtonpost?ref_src=twsrc%5Etfw">@washingtonpost</a> working on exposing 20-30 congressional members 4 sexual harassment. <a href="https://twitter.com/hashtag/DC?src=hash&amp;ref_src=twsrc%5Etfw">#DC</a></p> <p>— Michael Trujillo (@mikehtrujillo) <a href="https://twitter.com/mikehtrujillo/status/938815136571129856?ref_src=twsrc%5Etfw">December 7, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>Former Wall St. Journal reporter Neil King adds to Trujillo's figure, saying he hears the number <strong>"may top 40"</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Hearing the total may top 40. <a href="https://t.co/SIRQ9B4YLE">https://t.co/SIRQ9B4YLE</a></p> <p>— Neil King (@NKingofDC) <a href="https://twitter.com/NKingofDC/status/938834655146594307?ref_src=twsrc%5Etfw">December 7, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>Trujillo - a political advisor who has worked on over 39 political and legislative campaigns across the country, and was dubbed part of the "Clinton's Dream Team" by MSNBC, made the claim late last week.&nbsp;<strong style="font-size: 13.008px;">If true, this would implicate over 10% of male members of congress -&nbsp;</strong>unless woman are on the list<strong style="font-size: 13.008px;">&nbsp;- </strong>which, in any event, would likely lead to a massive self-draining of at least part of the swamp.</p> <p><em><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/frankenal_112717cf3_lead_0.jpg" width="400" height="225" /><br />Rep Al Franken (D-MN)</em></p> <p>Word of the potential new allegations comes on the heels of several high profile retirements in the wake of sexual misconduct claims. <a href="http://www.zerohedge.com/news/2017-12-07/watch-live-senator-franken-addresses-senate-amid-calls-his-resignation" target="_blank">Last Thursday</a>, <strong>Senator Al Franken announced his resignation</strong>:</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Sen. Al Franken: “Today I am announcing that in the coming weeks I will be resigning as a member of the United States Senate.” <a href="https://t.co/VdXwEXAW0J">https://t.co/VdXwEXAW0J</a> <a href="https://t.co/hDnUs8IuOB">pic.twitter.com/hDnUs8IuOB</a></p> <p>— CNN (@CNN) <a href="https://twitter.com/CNN/status/938814797843484675?ref_src=twsrc%5Etfw">December 7, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>Franken denied the validity of the <strong><a href="http://thehill.com/homenews/senate/363602-eighth-franken-accuser-comes-forward-after-dem-senators-call-for-his" target="_blank">eight</a></strong>&nbsp;allegations against him, stating "<strong>some of the allegations against me are simply not true. Others I remember differently</strong>."&nbsp;</p> <p>The day before Franken announced his resignation, 88-year-old Rep. <strong style="font-size: 13.008px;">John Conyers </strong>(D-MI) "<a href="http://www.zerohedge.com/news/2017-12-05/democratic-congressman-conyers-retires-not-resigns-sexual-misconduct-allegations-bui" target="_blank" style="font-size: 13.008px;">retired</a>" as the longest serving House member and founding member of the Black Caucus.&nbsp;House Democratic Leader Nancy Pelosi had encouraged the House Ethics Cmte to "proceed expeditiously" as it investigates accusations against Conyers. The review began after reports Conyers reached a $27k settlement with a former aide who said she was fired for rejecting his sexual advances; since then, Conyers has been accused of harassment by other women.&nbsp;Conyers has acknowledged the settlement but denied sexual harassment claims.</p> <p>Republican Congressman <strong>Trent Franks&nbsp;</strong>(R-AZ) also announced his resignation last week while under threat of an ethics probe for a sexual harassment allegation lodged by a woman in his office after Franks who says he offered her $5 million to be a surrogate mother for his children, and that she and another female employee were worried that he wanted to have sex as a means of impregnating them.&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Andrea Lafferty, the executive director of the Traditional Values Coalition, said that one of the women approached by Mr. Franks told her about the encounter last year, and said that Mr. Franks entreated her repeatedly to be a surrogate mother, at one point offering $5 million. </p> <p>&nbsp;</p> <p>“She rebuffed him many times,” Ms. Lafferty said. -<em><a href="http://archive.is/jenxM" target="_blank">NYT</a></em></p> </blockquote> <p>The allegations against Franks caused Speaker Paul Ryan to meet with him and ask for his resignation.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">NEW: House Speaker Paul Ryan says he met with Trent Franks Wednesday about allegations he found `serious and requiring action.' Told him he should resign. (Franks in earlier statement says he spoke to two female staffers about being surrogate moms) <a href="https://t.co/j5mDJVbfnW">pic.twitter.com/j5mDJVbfnW</a></p> </blockquote> <blockquote class="twitter-tweet"><p>— Laura Litvan (@LauraLitvan) <a href="https://twitter.com/LauraLitvan/status/938920079789645825?ref_src=twsrc%5Etfw">December 7, 2017</a></p></blockquote> <p>Meanwhile, Senator and former Clinton running mate&nbsp;<strong>Tim Kaine</strong>&nbsp;(D-VA) thinks Franken's resignation sets a new precedent.&nbsp;As <em style="font-size: 13.008px;"><a href="https://www.vanityfair.com/news/2017/12/congresss-sexual-harassment-scandal-is-about-to-get-even-worse" target="_blank">Vanity Fair</a> </em>notes:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Given that Congress’s Office of Compliance—the only recourse staffers have to report abuse—is all but <a href="https://www.vanityfair.com/news/2017/11/john-conyers-congresss-secret-history-of-sexual-harassment-is-about-to-explode" target="_blank">explicitly designed</a> to protect lawmakers, <strong>a reckoning over sexual harassment on Capitol Hill is long overdue</strong>. Democrats, unlike Republicans, are mostly cheering the sea change, even as some wonder whether Franken’s resignation may have set a harsh new precedent. “<strong>This does establish a new standard for this body</strong>,” Senator <strong>Tim Kaine&nbsp;</strong><a href="https://twitter.com/frankthorp/status/939117204649504768" target="_blank">told</a> reporters on Thursday. “<strong>And that standard is: behavior before you were elected is fair game for determining whether you should be here.</strong>” He added, “<strong>If that’s the standard, we have to be committed to trying to apply that in an evenhanded way</strong>.”</p> </blockquote> <p>An interesting comment by Kaine... Now that the Russiagate investigation appears to be stalling out and Special Counsel Robert Mueller's team revealed to be highly politicized and stacked with several anti-Trump investigators, it's apparently time for the President's enemies to shift the narrative again -<strong> as several Trump accusers are <a href="http://thehill.com/homenews/administration/364217-trump-accusers-to-unite-for-first-time-demand-congressional" target="_blank">holding a press conference Monday morning</a> to call for a congressional investigation into sexual misconduct.&nbsp;</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">NEW: Women who have publicly accused President Trump of sexual harassment and assault will speak at a news conference, hosted by <a href="https://twitter.com/bravenewfilms?ref_src=twsrc%5Etfw">@bravenewfilms</a>, Monday at 10:30 a.m. ET. The women are calling for an investigation by Congress of sexual misconduct by the president. <a href="https://t.co/MSPevMF0os">pic.twitter.com/MSPevMF0os</a></p> <p>— CBS News (@CBSNews) <a href="https://twitter.com/CBSNews/status/940049251211472896?ref_src=twsrc%5Etfw">December 11, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>The women are uniting for the first time to demand the probe and share details of their allegations&nbsp;against the President, according to the release. The press conference will be hosted by a documentary group that previously released a film about allegations against Trump.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/trumpaccusers.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/trumpaccusers_0.jpg" width="400" height="300" /></a></p> <p><em>Eight Trump Accusers</em></p> <p>The President has <a href="http://thehill.com/homenews/administration/357548-white-house-all-the-women-who-accused-trump-of-sexual-assault-are" target="_blank">denied the allegations</a>, while the White House said in October that its official position is that all of the women are lying. Trump called the allegations "total fiction" when they emerged in October, 2016 - weeks before the election - the first such claims against Trump in his 50 year career.&nbsp;</p> <p>"<strong>These are stories that are made up, these are total fiction</strong>. You'll find out that, in the years to come, these women that stood up, it was all fiction," Trump said. "They were made up. I don't know these women, it's not my thing to do what they say."</p> <p>So - it appears we're in for quite the show; with <em>CNN </em>and <em>WaPo </em>rumored to have 20-40 stories in the works against members of congress, while a gaggle of Trump accusers assemble to rehash claims which first surfaced weeks before the 2016 election. Time for more popcorn and a barrage of very angry Trump tweets.&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="491" height="352" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/women%20accusers%20trump.jpg?1513008101" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/cnn-and-wapo-working-20-40-sexual-misconduct-stories#comments Al Franken American people of German descent Climate change skepticism and denial Congress Congress’s office of Compliance Donald Trump Donald Trump and Billy Bush recording House John Conyers MSNBC Nancy Pelosi Politics Politics The Apprentice Tim Kaine Top 40 Traditional Values Coalition Twitter Twitter United States United States Senate Weinstein effect White House White House WWE Hall of Fame Mon, 11 Dec 2017 16:09:43 +0000 Tyler Durden 608924 at http://www.zerohedge.com WTI-Brent Crude Spread Snaps After Forties Pipeline Closure For "Weeks, Not Days" http://www.zerohedge.com/news/2017-12-11/wti-brent-crude-spread-snaps-after-forties-pipeline-closure <p>Following the discovery of a<strong> &quot;small hairline crack&quot; in The Forties Pipeline System - one of the most important oil conduits in the world </strong>- its operator Ineos has decided a total controlled<strong> shutdown &quot;for weeks, not days&quot;</strong> is the safest option. This has sent <strong>the spread between WTI and Brent soaring</strong>...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_wtib.jpg"><img height="312" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_wtib_0.jpg" width="600" /></a></p> <p><strong>A &ldquo;small hairline crack&rdquo; was discovered during a routine inspection last week by Ineos contractors, just south of Aberdeen in Scotland.</strong> The pipeline&rsquo;s pressure was reduced for a full assessment but during that time the crack extended.</p> <p>As Bloomberg reports, Brent futures rose as much as $1.18 to $64.71 a barrel in London - <strong>the highest since June 2015...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_wtib1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171211_wtib1_0.jpg" style="width: 600px; height: 322px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;Despite reducing the pressure the crack has extended, and as a consequence the Incident Management Team has now decided that a controlled shutdown of the pipeline is the safest way to proceed,&rdquo;</strong> Ineos said in a statement.</p> <p>&nbsp;</p> <p>&ldquo;This will allow for a suitable repair method to be worked up.&rdquo;</p> </blockquote> <p>The pipeline system feeds crude to the Hound Point export terminal near Edinburgh in Scotland.</p> <p><strong>At over 400,000 barrels a day, the supplies that flow through the link are the single largest constituent part of the Dated Brent grade</strong> that helps to settle more than half the world&rsquo;s physical oil prices.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="964" height="501" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171211_wtib.jpg?1513008502" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/wti-brent-crude-spread-snaps-after-forties-pipeline-closure#comments Business Business Crack spread Crude Economy Forties pipeline system Hound Point Ineos Petroleum industry Pipeline Price of oil Mon, 11 Dec 2017 16:08:43 +0000 Tyler Durden 608925 at http://www.zerohedge.com The Biggest Bubble Ever, In Three Charts http://www.zerohedge.com/news/2017-12-11/biggest-bubble-ever-three-charts <p><a href="https://dollarcollapse.com/money-bubble/biggest-bubble-ever-three-charts/"><em>Authored by John Rubino via DollarCollapse.com,</em></a></p> <p>Each quarter, <a href="http://creditbubblebulletin.blogspot.com/2017/12/weekly-commentary-q3-2017-flow-of-funds.html" rel="noopener" target="_blank">Credit Bubble Bulletin&rsquo;s Doug Noland</a> posts a &ldquo;flow of funds&rdquo; report that analyzes the debt and securities markets data released by the Fed in its Z.1 Report. It&rsquo;s always shocking to see the numbers we&rsquo;re dealing with, but even more so lately as <strong>history&rsquo;s biggest financial bubble starts to dwarf its predecessors. </strong></p> <p>Here&rsquo;s some of the scarier data in chart form, with Noland&rsquo;s commentary:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>To the naked eye, percentage debt growth figures for the most part don&rsquo;t appear alarming. But there&rsquo;s several unusual factors to keep in mind. First, the outstanding stock of debt has grown so enormous that huge Credit expansions (such as Q3&rsquo;s) don&rsquo;t register as large percentage gains. Second, overall system debt growth continues to be restrained by historically low interest-rates and market yields. Debt simply is not being compounded as it would in a normal rate environment. And third, it&rsquo;s a global Bubble and a large proportion of global Credit growth is occurring in China, Asia and the emerging markets. U.S. securities markets continue to be a big target of international flows.</p> <p>&nbsp;</p> <p>With global Bubble Dynamics a dominant characteristic of this cycle, it&rsquo;s appropriate to place Rest of World (ROW) data near the top of Flow of Funds analysis. ROW holdings of U.S. Financial Assets jumped $724 billion (nominal) during the quarter to a record $26.347 TN. This puts growth over the most recent three quarters at a staggering $2.124 TN (16% annualized). What part of these flows has been associated with ongoing rapid expansion of global central bank Credit? It&rsquo;s worth recalling that ROW holdings ended 2007 at $14.705 TN and 1999 at $5.639 TN. As a percentage of GDP, ROW holdings of U.S. Financial Assets ended 1999 at 57%, 2007 at 100%, and Q3 2017 at a record 135%.</p> <p>&nbsp;</p> <p><a href="https://i0.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/Rest-of-world-holdings-US-assets-Dec-17.jpg?ssl=1"><img class="aligncenter size-full wp-image-17691" height="351" src="https://i0.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/Rest-of-world-holdings-US-assets-Dec-17.jpg?resize=550%2C359&amp;ssl=1" width="538" /></a></p> <p>&nbsp;</p> <p>Meanwhile, the Fed&rsquo;s Domestic Financial Sectors category expanded assets SAAR $2.841 TN during Q3 to a record $95.213 TN. In nominal dollars, the Financial Sector boosted assets a notable $5.085 TN over the past three quarters, almost 8% annualized growth. Notably, the sector&rsquo;s holdings of Debt Securities surged a nominal $775 billion in three quarters to a record $25.425 TN. Pension Funds were a huge buyer of Treasuries during the quarter (SAAR $1.075 TN). Over the past three quarters, the Financial Sector boosted holdings of Corporate &amp; Foreign Bonds by nominal $427 billion to $8.026 TN. More very big numbers.</p> <p>&nbsp;</p> <p><strong>One doesn&rsquo;t have to look much beyond the booming Rest of World and Domestic Financial Sector to explain ongoing over-liquefied securities markets. The numbers confirm a historic financial Bubble.</strong></p> <p>&nbsp;</p> <p>Total Equities Securities jumped $1.229 TN during the quarter to a record $43.969 TN, with a one-year gain of $5.923 TN (16.4%). Equities jumped to a record 224% of GDP, compared to 181% at the end of Q3 2007 and 202% to end 1999. Debt Securities gained $171 billion during Q3 to a record $42.385 TN, with a one-year gain of $1.080 TN. At 217% of GDP, Debt Securities remain just below the record 223% recorded in 2013.</p> <p>&nbsp;</p> <p><a href="https://i2.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/US-equities-GDP-Dec-17.jpg?ssl=1"><img class="aligncenter size-full wp-image-17693" height="347" src="https://i2.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/US-equities-GDP-Dec-17.jpg?resize=550%2C355&amp;ssl=1" width="538" /></a></p> <p>&nbsp;</p> <p>This puts Total (Debt &amp; Equities) Securities up $1.400 TN during the quarter to a record $86.080 TN. Total Securities inflated $7.003 TN, or 9.1%, over the past year. Total Securities experienced cycle tops of $55.261 TN during Q3 2007 and $36.017 TN to end March 2000. Total Securities ended Q3 2017 at a record 441% of GDP. This outshines the previous cycle peaks of 379% for Q3 2007 and 359% at Q1 2000. One more way to look at post-crisis securities market inflation: Total Securities ended Q3 $30.819 TN, or 56%, higher than the previous cycle peak in Q3 2007.</p> <p>&nbsp;</p> <p><a href="https://i0.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/Total-US-securities-GDP-Dec-17.jpg?ssl=1"><img class="aligncenter size-full wp-image-17692" height="350" src="https://i0.wp.com/dollarcollapse.com/wp-content/uploads/2017/12/Total-US-securities-GDP-Dec-17.jpg?resize=550%2C358&amp;ssl=1" width="538" /></a></p> <p>&nbsp;</p> <p><strong>There&rsquo;s no doubt that financial sector leveraging and foreign flows (especially through the purchase of U.S. securities) continue to play an integral role in the U.S. Bubble. Inflating asset prices and resulting bubbling U.S. Household Net Worth are instrumental in fueling the overall U.S. Bubble Economy.</strong></p> <p>&nbsp;</p> <p>As we think ahead to 2018, the question becomes how vulnerable U.S. securities markets are to waning QE and reduced central bank Credit expansion. Inflating a Bubble creates vulnerability to any slowdown in underlying Credit and attendant financial flows. And it&rsquo;s the final parabolic speculative blow-off that seals a Bubble&rsquo;s fate. It ensures market dependency to unusually large and inevitably unsustainable flows. The Fed&rsquo;s latest Z.1 report does a nice job of illuminating the historic scope of the U.S. securities Bubble. U.S. securities markets have been on the receiving end of extraordinary international flows, while inflating securities and asset prices have spurred rapid financial sector expansion.</p> </blockquote> <p><strong>Note that in the two &ldquo;% of GDP&rdquo; charts today&rsquo;s numbers are compared to the previous two bubble peaks when things had gotten so far out of hand that the following year saw massive financial crises. So the fact that we&rsquo;ve blown through those two previous records portends interesting times ahead.</strong></p> <p>To sum up Noland&rsquo;s analysis, the US, along with the rest of the world, has entered full Ponzi, where credit has to continue to rise at unprecedented rates to keep the system from imploding. But the more credit we take on, the more fragile the system becomes. A sudden decline in equities or bonds, geopolitical tensions escalating, cryptocurrencies threatening fiat currencies, you name it, can crack the façade of normality that rising asset prices create.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="243" height="154" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171211_bubble.jpg?1513001862" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/biggest-bubble-ever-three-charts#comments Business Business cycle Causes of the Great Recession China Economic bubble Economy Economy of the United States Finance Financial crises Great Recession Money Security Subprime mortgage crisis US Federal Reserve Z.1 Mon, 11 Dec 2017 15:51:03 +0000 Tyler Durden 608914 at http://www.zerohedge.com Near Record 5.6 Million Americans Were Hired In October, Most In Over 16 Years http://www.zerohedge.com/news/2017-12-11/56-million-americans-were-hired-october-most-over-16-years <p>After a burst of record high job openings which started in June and eased modestly in August, <a href="https://www.bls.gov/news.release/pdf/jolts.pdf">today's October JOLTS report&nbsp; </a>- Janet Yellen's favorite labor market indicator - showed a sharp drop in job openings across most categories now that hurricane distortions have cleared out of the system, with the total number dropping from 6.177MM to 5.996MM, well below the 6.135MM estimate, the biggest monthly drop and the lowest job openings number since May, resulting in an October job opening rate of 3.9% vs 4% in Sept. </p> <p>After nearly two years of being rangebound between 5.5 and 6 million, the latest drop in job openings despite the alleged improvement in the economy is another inidication that an increasingly greater number of jobs may simply remain unfilled in a labor market where skill shortages and labor imbalances are becoming structural.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%20Oct%201.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%20Oct%201_0.jpg" width="500" height="320" /></a></p> <p>The number of job openings was down for total private and was little changed for government. Job openings increased in accommodation and food services (+94,000), construction&nbsp; (+48,000), and real estate and rental and leasing (+40,000). Job openings decreased in wholesale trade (-90,000), finance and insurance (-47,000), information (-32,000), and nondurable goods manufacturing (-26,000). The number of job openings was little changed in all four regions. Now if only employers could find potential employees that can <a href="http://www.zerohedge.com/news/2017-07-31/ohio-factory-owner-eager-hire-workers-there-just-one-problem">pass their drug test...</a> </p> <p>One notable change in this report was that despite the sharp drop in job openings, <strong>the number of hires in October soared by 232K to 5.552MM in October, the highest since March 2001, and further reducing the hiring rate from 3.8% to 3.6%. </strong>At the industry level, the number of hires increased in other services (+55,000) and health care and social assistance (+45,000). Hires decreased for state and local government, excluding education (-32,000). The number of hires increased in the Northeast region.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%20oct%202%20hires.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%20oct%202%20hires_0.jpg" width="500" height="308" /></a></p> <p>On an annual basis, the pace of hiring spiked in October, rising from 2.7% Y/Y in Sept., to 6.8% in October, the highest since February 2016. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%203%20hiring%20yoy.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%203%20hiring%20yoy_0.jpg" width="500" height="297" /></a></p> <p>The other closely watched category, the level of quits - which indicates workers' confidence they can leverage their existing skills and find a better paying job - was unchanged in October, and was identical to the 3.18MM quits in September, suggesting little change to worker confidence about demand for their job skills. The number of quits was little changed for total private, for government, and in all industries. In the regions, the number of quits increased in the South and decreased in the Midwest.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%204%20quits%20layoffs.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%204%20quits%20layoffs_0.jpg" width="500" height="415" /></a></p> <p>And with a total 5.2 million separations (a 3.5% rate), this means that there were 1.6 million layoffs and discharges in October, little changed from September. The layoffs and discharges rate was 1.1 percent in Oct. The layoffs and discharges level increased in finance and insurance (+37,000) and in mining and logging (+7,000). Layoffs and discharges decreased in construction (-69,000) and in state and local government, excluding education (-15,000). The number of layoffs and discharges decreased in the Northeast region.</p> <p>Putting all the data in context:</p> <ul> <li>Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.0 million open jobs on the last business day of October 2017.</li> <li>Hires have increased since a low in June 2009 and have surpassed prerecession levels. In October 2017, there were 5.6 million hires.</li> <li>Quits have increased since a low in September 2009 and have surpassed prerecession levels. In October 2017, there were 3.2 million quits.</li> <li>For most of JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.</li> <li>At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In October 2017, there were 444,000 fewer hires than job openings.</li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%205%20job%20openings%20hires%20quit.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%205%20job%20openings%20hires%20quit_0.jpg" width="500" height="424" /></a></p> <p>Finally, and perhaps most notably, the Beveridge Curve (job openings rate vs unemployment rate), appears to be gradually normalizing after a nearly decade-long "drift" from its conventional pattern. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. In October 2017, the unemployment rate was 4.1 percent and the job openings rate was 3.9 percent.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%204%20beveridge%20curve.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/JOLTS%204%20beveridge%20curve_0.jpg" width="500" height="427" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1105" height="681" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/JOLTS%20oct%202%20hires.jpg?1513006208" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/56-million-americans-were-hired-october-most-over-16-years#comments Business Economy Employment Labor Labour law Layoff Real estate Recession Social justice Unemployment Unemployment Mon, 11 Dec 2017 15:33:40 +0000 Tyler Durden 608921 at http://www.zerohedge.com Senate Tax Debacle: Certain Pass-Through Entities Face Marginal Tax Rates Over 100% Under Current Bill http://www.zerohedge.com/news/2017-12-11/senate-tax-debacle-certain-pass-through-entities-face-marginal-tax-rates-over-100-un <p>As the House and Senate continue to try to reconcile their two versions of a tax plan,<strong> the taxing structure for pass-through entities (s-corps, LLC's, etc.) continues to be somewhat controversial, if not completely nonsensical.</strong> As we pointed out last week, the Senate bill somewhat randomly chose to <a href="http://www.zerohedge.com/news/2017-12-07/how-trumps-tax-plan-singles-out-family-trusts-subsidize-corporate-tax-cuts">exclude pass-through entities organized as family trusts</a> from tax cuts which would ultimately leave them on the hook for much larger tax bills due to the elimination of other deductions. It's unclear whether this bizarre exclusion was just an oversight or an intentional political hit on an easy target that no one in Washington DC would dare defend publicly: rich families organized as trusts.</p> <p><strong>Now, a new note from the <a href="http://www.taxpolicycenter.org/taxvox/senate-tax-bill-would-impose-high-marginal-tax-rates-some-pass-through-owners">Tax Policy Center</a> lays out some scenarios whereby the marginal tax rate for high-income pass-through entities could soar to over 100%.</strong>&nbsp; Of course, while two rational people can debate the impact of a ~40% tax rate on a person's desire to work, we're almost certain that a taxing structure that takes more than 100% of your marginal income will be a slight disincentive.&nbsp; Here's an example of how it works from the <a href="https://www.wsj.com/articles/the-taxman-cometh-senate-bills-marginal-rates-could-top-100-for-some-1512942118">Wall Street Journal</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Consider, for example,<strong> a married, self-employed New Jersey lawyer with three children and earnings of about $615,000. Getting $100 more in business income would force the lawyer to pay $105.45 in federal and state taxes,</strong> according to calculations by the conservative-leaning Tax Foundation. That is more than double the marginal tax rate that household faces today.</p> <p>&nbsp;</p> <p><strong>If the New Jersey lawyer’s stay-at-home spouse wanted a job, the first $100 of the spouse’s wages would require $107.79 in taxes. And the tax rates for similarly situated residents of California and New York City would be even higher,</strong> the Tax Foundation found. Analyses by the Tax Policy Center, which is run by a former Obama administration official, find similar results, with federal marginal rates as high as 85%, and those don’t include items such as state taxes, self-employment taxes or the phase-out of child tax credits.</p> </blockquote> <p>As Joseph Rosenberg of the <a href="http://www.taxpolicycenter.org/taxvox/senate-tax-bill-would-impose-high-marginal-tax-rates-some-pass-through-owners">Tax Policy Center</a> notes, the penalty is greatest for high-income pass-through entities in highly taxed states.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Consider the example of a married couple whose entire income is “specified service” income generated by a pass-through entity and who claims the standard deduction. At an income of $524,000, the couple could take an $87,000 deduction (17.4% of the couple’s taxable income “without regard” to the deduction) that would reduce their taxes by $30,450 (since they are in the 35% tax bracket), but the deduction is entirely phased out at an income of $624,000. On average, that amounts to more than a 30% surtax on top of the 35% statutory tax rate over that range of income.</p> <p>&nbsp;</p> <p>The actual phase-out is much more complicated, as the bill’s text released Monday night makes clear, because the deduction continues to apply even as its benefit is phased out. (If that sounds convoluted, it’s because it is.) <strong>The couple’s marginal income tax rate would jump to 61.375% at $528,541 of income. And it would rise to 73% until their income reaches $624,000 and the deduction is fully phased-out,</strong> at which point their marginal tax rate would return to the 35 percent ordinary income tax rate. (Note that these calculations do not include the additional 3.8 percent in self-employment payroll tax or the net investment income tax).</p> </blockquote> <p>Here is how the overall tax rate schedule for pass-through income would look:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/12/11/2017.12.11 - TPC.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/12/11/2017.12.11%20-%20TPC_0.JPG" style="width: 600px; height: 355px;" /></a></p> <p>“This is a big concern,” said Scott Greenberg, a Tax Foundation analyst. <strong>“It would be unfortunate if Congress passed a tax bill that had the effect of making additional work and additional income not worthwhile for any subgroup of households.”</strong></p> <p>Of course, in the end, this type of taxing structure just raises the returns on "gaming" the tax system in every way possible.&nbsp;<strong> “I would expect a huge tax-gaming response once people fully understand how it works,”</strong> said Mr. Gamage, a former Treasury Department official, who said business owners have an easier time engaging in such tax avoidance than salaried employees do. <strong>“The payoff for gaming is huge, within the set of people who both face these rates and have flexible enough business structures.”</strong></p> <p>Not surprisingly, lawmakers are looking at changes to prevent this debacle from happening as they attempt to reconcile Senate and House versions of the tax bill this week. The formal House-Senate conference committee will meet on Wednesday, and GOP lawmakers have said they may unveil an agreement by week’s end...though they seem to consistently miss their own self-imposed deadlines.</p> <p>But you shouldn't worry about these issues too much as a spokeswoman for the Senate Finance Committee assured the Journal that as <strong>"with any major reform, there will always be unusual hypotheticals delivering anomalous results</strong>...The goal of Congress’s tax overhaul has been to lower taxes on the American people and by and large, according to a variety of analyses, we’re achieving that."</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="704" height="390" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Uncle%20Sam.JPG?1512997574" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-11/senate-tax-debacle-certain-pass-through-entities-face-marginal-tax-rates-over-100-un#comments Business Congress Department of the Treasury Economy ETC Flat tax Income tax New York City Obama Administration Obama administration Republican Party Rosenberg Senate Senate Finance Committee Social Issues Tax Tax avoidance Tax Foundation Tax incidence Tax Policy Center Taxation in the United States Treasury Department Wall Street Journal Mon, 11 Dec 2017 15:14:44 +0000 Tyler Durden 608912 at http://www.zerohedge.com