President Donald Trump has done an admirable job at defanging the IRS, which was converted into a weaponized agency targeting their political enemies.
Chief Justice John Marshall famously pronounced early in our nation’s history that “the power to tax is the power to destroy.”
The Democrats inside the Biden IRS took that to heart. They hired thousands of new IRS agents to harass businesses, rich people, and, in some cases, Republican donors. Some of the lieutenants to the infamous IRS enforcer Lois Lerner, the woman who aimed her agency’s auditing guns at conservative groups, are still active at the tax agency.
One of the most noxious of Biden’s left-over regulatory rules applies to partnerships – an increasingly common form of business organization and expansion. Microsoft’s revenues/profits flow down through its business partners.
Business partnerships are vital contributors to the U.S. economy. A 2024 study by Ernst and Young for the Small Business Entrepreneur Council found that 10 million Americans work for these partnerships, and they generate $1.3 trillion in GDP.
The IRS evidently thinks they are TOO successful.
A gang of holdovers from the Biden administration and the ranking Democrat on the Senate Finance Committee, Ron Wyden of Oregon, are trying to administratively change the taxation of pass-throughs and partnerships and subject these entities to “guilty until proven innocent” audits. The changes would alter the “economic substance doctrine” which determines how the taxes on a business’s profits are applied to the partners. If the entities are found liable for increased tax assessments, they could face a giant tax bill AND a confiscatory 60% strict liability penalty.
These partnership rules are admittedly murky and may need updated protections against potential tax evasion abuses. But this rewrite of the tax laws would be applied WITHOUT CONGRESSIONAL APPROVAL. The Trump admin promised to end this illegal rewrite of the tax laws, but because of the turmoil at the IRS – with a revolving door of IRS Commissioners – the Biden-era rules still stand.
Meanwhile, Wyden has introduced legislation to codify these new rules into law. Get this: the Joint Committee on Taxation scores these IRS “reforms” as a potential $730 billion business tax increase over the next decade.
If the IRS isn’t told to cease and desist, they could be the perpetrators of the largest non-congressionally approved tax increase in American history.
The Trump administration is supposed to be easing the tax burden on our businesses and employers to make them more globally competitive, not handing them a three-quarter trillion-dollar tax INCREASE.
Trump or Treasury Secretary Scott Bessent should fix this tax raid on business before it reverses some of the job-creating benefits of Trump’s Big Beautiful Bill.
Stephen Moore is a contributor to The Daily Caller News Foundation, a visiting senior fellow at the Heritage Foundation, and a co-founder of Unleash Prosperity.
Let’s start with a very simple truism: you can’t have prosperity without people.
Human beings are the most valuable resource, because it is human ingenuity that creates and cultivates all other earthly resources. We as human beings are the custodians and protectors of the planet, not its destroyers, as the radical environmentalists would have you believe.
The richer and more technologically advanced we become, the more likely we are to avert a catastrophic event like a giant meteor crashing into the planet and destroying all life.
Which brings us to a potentially ruinous trend: many countries are literally running out of people.
This alarming chart on births and deaths in Europe is a terrifying glimpse into the future of a new dark age of the western world, if birth rates don’t start rising — and quickly. Europeans are becoming extinct.
Negative population growth is a sure killer of prosperity and human flourishing. It’s also contrary to Christianity and most other religions, which instruct us to “be fruitful and multiply.”
It’s not just Europe. Japan and Korea will cut their populations in half over the next 80 years if they don’t start moving away from one child per couple rates of propagating.
Why are rich countries depopulating the planet?
For 60 years, prophets of doom like Paul Ehrlich (“The Population Bomb”) and governments around the world — including our own — warned that we all had a moral obligation to save the planet by having fewer babies. There were periods of forced abortions, forced sterilizations, forced birth control, and — in advanced nations like in Europe and the U.S. — a cultural sneering at families with four or five or six kids.
That mendacious propaganda campaign worked all too well. Look what it has wrought.
There are other explanations. As we have gotten richer — and especially as women’s earnings have risen — the “cost” of having a child in terms of lost income, has risen. Women are less likely to have more than one or two children. To be clear: I’m NOT suggesting that women should be paid less!
Marriage rates have declined, and vows are coming later in life, so the median year for a woman to have a child keeps rising — leaving fewer fertility years left for multiple children.
Religiosity has declined somewhat in our more secular “me first” society. That’s sad because childless couples tend to be less happy. And why have kids if you don’t believe there is a divine reason we were put on this planet?
The solutions to this problem aren’t obvious. Pro-natalist government policies, like paying people to have kids and offering free childcare have had spotty levels of success.
The U.S. has delayed the demographic crisis happening in Europe and much of Asia through immigration of young workers. Not only do immigrants increase the population, but they tend to have more kids than native-born Americans.
But even with immigration, we in America have an obvious aging problem.
One simple step is to start celebrating as a society the virtues and the self-sacrifice of motherhood. Our schools and our teachers and our clergy and our political leaders need to keep pushing the message that the greatest contribution men and women can give to saving our species is to have more kids — as soon as possible.
Stephen Moore is a contributor to The Daily Caller News Foundation, a cofounder of Unleash Prosperity, and a former senior economic advisor to President Donald Trump.
Here’s an economics lesson that belongs in the text books.
Student loan debt soared to more than $1.5 trillion during the Biden presidency and the response by Washington was to “forgive” hundreds of billions of these unpaid loans by deadbeat borrowers and let the taxpayers pick up the tab. It was never clear why the universities who charge exorbitant tuitions that have reached more than $75,000 a year at many elite schools shouldn’t bear the cost of the program – but that’s another story.
Those of us who watched these events upfold predicted that one result of this policy would be that many college graduates would stop paying back their loans. And guess what?
Just like clockwork, this headline from Bloomberg recently told the whole story:
“Student loans drive U.S. delinquency rate to highest since 2020”
Gee, who – except a bunch of head-in-the-sand- politicians in Washington – would have ever thought that forgiving as many people from paying their student loans as possible would increase future non-payments?
Well, the Biden administration for one. Now that the Department of Education is honestly reporting the data, we find that serious delinquency rates are over more than 10 times what the Biden Department of Education said they were.
There is an old saying in physics and economics: every action in the universe has a reaction. How many students in the future will pay back unpaid student loans when the next forgiveness program is right around the corner? So people who did the right thing and paid back their debts now have to pay more for the people who refused to pay back the money they owed.
In Washington, we love to reward vice and punish virtue.
As we said many times last year: expect student loan defaults to remain sky high for many years, as deadbeat borrowers wait for the next student loan amnesty program.
Fortunately, in the House of Representatives “Big Beautiful tax bill,” there are new caps of $50,000 on student loans for undergraduate students and $100,000 for grad students. This cap should help slow the stampede of higher tuition prices, which have grown two to three times the rate of overall inflation over the last thirty years. The availability of cheap student loans only fueled this stampede of tuition prices. The Wall Street Journal calls this move “The End of The College Free Lunch.”
The bad news is that we should anticipate bigger stashes of student loans to pile up at taxpayers’ doors in the years to come. The good news is that this scam has reminded us that in life incentives matter. This episode brought to light the financial foolishness of debt forgiveness programs and so hopefully we will never do this again.
Stephen Moore is a contributor to The Daily Caller News Foundation, a cofounder of Unleash Prosperity, and a former senior economic adviser to Donald Trump. His most recent book is “The Trump Economic Miracle.”
Donald Trump has promised to create millions of new high-paying jobs.
One easy first step to doing that is to repeal Biden-regulations on America’s 4 million business partnerships (sometimes known as S-corporations) that are prolific job creators. The latest estimates find 10 million Americans employed by these business partnerships, with $800 billion paid in worker salaries and benefits.
For example, “95 percent of Microsoft’s commercial revenue flows directly through” its “partner ecosystem.” The profits from these enterprises are passed through to the 4 million partners, who make tax payments based on their share of those earnings.
These have been the tax rules governing partnerships for many decades. The Biden administration didn’t like the tax rules, so instead of asking Congress to change them, Biden’s Treasury Department worked through the back door to unilaterally modify the rules, as part of its “fairness” agenda.
The precise tax target is a technique used by partnerships to lower their tax liability called “basis shifting.” While technically complex (because everything with the U.S. tax code is complicated), it is also entirely legal and has been used by partnerships for decades to adjust the value of their assets during a transaction or transfer. Whatever one thinks of basis shifting, the Internal Revenue Service (IRS) doesn’t have the unilateral authority to change the tax laws — only Congress does.
The Biden crackdown treated business partners as tax cheats. When they hired 87,000 agents to harass companies and individuals, nearly 4,000 of these IRS tax collectors were hired to among other things, “expand enforcement focusing on complex partnerships.”
The more than four million business partnerships became an overnight suspect class, as did the tax returns of millions of partners.
To pry money out of these partnerships, the Biden team wanted to create a retroactive tax (which should be illegal) by changing the rules and apply them going back six years in time. So a tax structure that may have been perfectly legal in the past could now trigger investigations, fines, and litigation.
Biden Treasury Secretary Janet Yellen also created a new investigative office to oversee and harass partnerships. That should be shutdown.
So a tax structure that may have been perfectly legal in the past could now trigger investigations, fines, and litigation.
More than 90% of partnerships are small businesses, according to an Ernst and Young study prepared for the Small Business & Entrepreneurship Council (SBE Council) last year. The business partnership arrangement allows these firms to have ready access to needed capital to expand their operations. In all these companies generated $1.3 trillion to our GDP.
These partnership arrangements allow promising small companies to grow into large ones. This uniquely American business structure is a hallmark of U.S. entrepreneurial success — a path for businesses to go from good to great.
It isn’t broken. The system works. That’s why the Trump Treasury Department needs to immediately command the IRS to cease and desist the Biden witch hunt against these partnerships.
It’s a war on wealth. A war on U.S. businesses. And it’s a direct assault on the Trump promise to “make America great again.”
Stephen Moore is a contributor to The Daily Caller News Foundation, a senior fellow at the Heritage Foundation, and a co-founder of Unleash Prosperity. His latest book co-authored with Arthur Laffer is “The Trump Economic Miracle.”
Republicans are searching for ways to “pay for” their tax cuts. Democrats want the rich to pay more tax. Here’s a solution that should make everyone happy.
House Ways and Means Committee chairman Jason Smith is suggesting a tax on the $840 billion college endowments. These endowments will soon eclipse $1 trillion in size – which is more money than the entire GDP of many countries.
It’s high time that bloated and entitled universities pay “their fair share” for the government services they use.
Why not? Their professors forever lecture us about tax “fairness,” but the schools where they teach a few hours a week for their munificent salaries are the very embodiment of mostly-white “privilege.” They are are the richest institutions in the world that go untaxed.
The cost of this leakage to the tax base is going to grow exponentially as this generation of billionaires (Bezos, Gates, Zuckerberg and others) pass on trillions of dollars – much of it will enter into the vaults of the universities. These are capital gains that have NEVER been taxed – and never will be.
Why is this a problem?
A good and just tax system has a broad base – so everyone pays – but a low rate so the tax system doesn’t discourage, work, saving and investment. This means no loopholes and carve outs that allow the rich to keep their fortunes out of reach of the tax man.
What makes the college endowment scam even worse is that the preponderance of the dollars don’t go to small colleges or community colleges, but rather the Harvards, Yales, Stanfords and Princetons that are already layered with gold and service the elite of society.
It makes no sense that millionaires and billionaires can make seven, eight and even nine- figure donations to their Alma mater and these funds escape the taxes that all the rest of us pay.
It’s even worse than that. Colleges pay almost no income taxes and generally avoid paying property taxes even though their vast tracts of valuable land are in or near struggling inner cities.
The universities openly boast to their donor base: contribute to us and you can avoid paying the estate tax and capital gains tax on your billions. Why aren’t liberals offended by this tax escape hatch?
I have no problem with a deduction for legitimate charities like soup kitchens and homeless shelters and orphanages. But Northwestern and Stanford need tax breaks? Has anyone been to their glitzy campuses.
There are at least a dozen schools bulging with $10 billion endowments and scores more with more than $1 billion. We should call these schools Loophole U.
What public purpose is advanced by these storehouses of wealth?
Harvard’s near $50 billion endowment is so large that the school could charge free tuition to every student from now until kingdom come – and still not run out of money. Yet Harvard still charges $100,000 a year for tuition and room and board.
But this is the real sin of this unworthy tax loophole. Even with these giant endowments, college tuitions have been rising at two to three times the rate of inflation. The argument that tax-free donations make colleges more affordable has proven to be patently false. The bigger the endowment the more the schools charge students and their parents – and taxpayers.
One of the best ways to help inner cities would be to require all universities (and hospitals) to pay property taxes. This would broaden the tax base in poor cities where nonprofits have grabbed the most valuable real estate. Instead of chasing people out of the cities like Boston, Chicago, Philadelphia and New York with exorbitant taxes, dinging the big U down the street would allow cities to CUT their taxes for everyone else.
By the way, colleges and hospitals make use of city services even more than homeowners and mom and pop businesses do. Why should they not pay for these services?
Richard Vedder a famous economist at the University of Ohio has noted that “one of the most regressive policies in the tax code is the subsidies to the billion-dollar universities. This only Makes the Rich, richer.”
In a famous scene in the movie Animal House, Dean Wormer lectures to one of the students who is facing expulsion: “Fat, drunk and stupid is no way to go through life, son.”
Ironically, that could describe more than 100 overly-endowed universities today that are more like investment houses that happen to have classrooms and students roaming around. Colleges need to pay their fair share, and the revenues should be used to help pay for the Trump tax cuts – which benefit everyone. That sounds fair to me.
Stephen Moore is a contributor to The Daily Caller News Foundation, a visiting fellow at the Heritage Foundation, and a co-founder of Unleash Prosperity.
