Trump Finds Loopholes in Chief of Staff’s New Regime

Kelly establishes control, but the president’s ‘workarounds’ show its limits

Chief of Staff John Kelly over the past five months has imposed discipline and rigorous protocols on a freewheeling White House. But President Donald Trump has found the loopholes.

The president on occasion has called White House aides to the private residence in the evening, where he makes assignments and asks them not tell Mr. Kelly about the plans, according to several people familiar with the matter. At least once, aides have declined to carry out the requested task so as not to run afoul of Mr. Kelly, one of these people said.

Four Rules for the Coming Tax Reform Debate

True reform will require a bipartisan consensus around closing loopholes to pay for the lowering of statutory tax rates paid by businesses, and reducing burdens on working families. Changing tax law must be done in a fiscally responsible way, without cutting taxes for the very wealthy.

First, changes in the tax rates for individuals must at least maintain the current levels of progressivity

  1. Cutting tax rates for the very wealthy would deepen the income inequality that underlies the anxiety and anger among American voters. If Congress doesn’t preserve or increase progressivity, we won’t have the resources to pay for investments like infrastructure and child care.
    • .. Congress must also maintain the estate tax, which is levied only on estates worth more than $5.49 million ($10.98 million for a couple), affects only the wealthiest 0.2 percent and protects small businesses, including family farmers.
    • .. Many of the estates that are taxed have assets that have increased in value but have never been subject to capital gains tax, and never will be. The idea that the estate tax imposes double taxation is largely a myth.
  2. Second, tax cuts must be offset by revenue-raising measures. With the country in the ninth year of an economic recovery, the case for pure stimulus is weak, and digging a deep hole of debt by cutting taxes will make it harder to pay for other priorities.
    • Tax cuts need to be revenue neutral, paid for by reducing tax subsidies, ending loopholes or generating new revenue.
  3. Third, Congress should rely on its Joint Committee on Taxation and the Congressional Budget Office to estimate what a tax bill will cost.
    1. Claims that tax cuts pay for themselves must be treated with great skepticism.
    2. Such a reckless move would almost surely produce an explosion of debt. In 1981, 2001 and 2003, tax cuts based on projections that they would largely pay for themselves did not, and when deficits soared, future presidents had to make hard choices to restore fiscal stability.
  4. Fourth, business tax reform must not open up new loopholes for top earners to evade taxes. Proposals to lower the tax rate on “pass-through” income (income that partnerships, sole proprietorships, S corporations and limited-liability companies “pass through” to owners) would create a costly, unpoliceable loophole. Wealthy individuals and businesses could easily reorganize on paper to take advantage of low pass-through rates.
    1. most pass-through income goes to wealthy individuals and big businesses like hedge funds and large oil and gas pipeline companies organized as limited partnerships.
    2. Kansas instituted a similar policy in 2012 and repealed it this year after 100,000 new pass-throughs emerged — among them the coach of the University of Kansas basketball team, who had his salary paid to a pass-through entity to escape state income tax. Yet job and economic growth in Kansas lagged that of most neighboring states, evidence that the policy did not produce the growth that supporters promised

Who Is Winning With the Fiduciary Rule? Wall Street

The rule requires brokers to act in the best interests of retirement savers, rather than sell products that are merely suitable but could make brokers more money. Financial firms decried the restriction, which began to take effect in June, as limiting consumer choice while raising their compliance costs and potential liability.

But adherence is proving a positive. Firms are pushing customers toward accounts that charge an annual fee on their assets, rather than commissions which can violate the rule, and such fee-based accounts have long been more lucrative for the industry.

In earnings calls, executives are citing the Department of Labor rule, known varyingly as the DOL or fiduciary rule, as a boon.

.. “Whether it’s in clients’ best interest is unclear,” said Steven Chubak, an analyst at Nomura Instinet. But the fiduciary rule is ”incentivizing firms to accelerate conversions“ to fees from commissions, he said, and “certainly the amount charged on a fee-based account versus a [commission-based] brokerage account is higher.” The push is speeding up an industry trend toward fees, which offer more predictable revenue than commission-based accounts.

.. The fiduciary rule also is supporting the shift to lower-cost index funds

.. Other changes stemming from the fiduciary rule could hurt over the longer term.

.. products such as higher-cost mutual funds face pressure from lower-cost passively managed funds

How Jared Kushner built a luxury skyscraper using loans meant for job-starved areas

They worked with state officials in New Jersey to come up with a map that defined the area around 65 Bay Street as a swath of land that stretched nearly four miles and included some of the city’s poorest and most crime-ridden neighborhoods. At the same time, they excluded some wealthy neighborhoods only blocks away.

.. The tactic — critics liken it to the gerrymandering of legislative districts — made it appear that the luxury tower was in an area with extraordinarily high unemployment, allowing Kushner Companies and its partners to get $50 million in low-cost financing through the EB-5 visa program.

.. Apartments in the Bay Street building, marketed as Trump Bay Street, rent for up to $4,700 a month and offer sweeping views of Lower Manhattan. A nearby commuter train shuttles passengers to the World Trade Center within minutes. The area within a roughly three-block radius around the building had an unemployment rate of just 2.6 percent in 2015, according to census data.

..Under the EB-5 program, a wealthy foreigner can get a fast-track residence visa by investing at least $500,000 in a project in a “targeted employment area.”
..Kushner Companies, meanwhile, is rushing to raise $150 million in low-cost financing through EB-5 for a separate project in Jersey City: a pair of luxury towers in an area called Journal Square.
..He also said jobs created by the project could be filled by workers from the depressed areas only miles away.
..Developers typically pay only 4 to 8 percent interest annually on money raised through EB-5, experts said. Conventional financing can carry interest rates of between 12 and 18 percent.