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.
All of Washington is acting like their hair is on fire with the Department of Government Efficiency (DOGE) requirement that federal employees list what they accomplished. Many are acting like they don’t know the answer and they want to phone a friend.
The Civil Service system is long overdue for a thorough review.
Let’s start with this simple fact: the most leftwing institution in America is the roughly 3 million members of the federal workforce. There is probably no group that comes even close. We know that more than nine of ten Washington, D.C., residents voted for former Vice President Kamala Harris. We know that the overwhelming number of federal employees are registered Democrats.
Workers have the right to vote for whomever they wish. But in an era when the left preaches nothing but diversity, equity and inclusion (DEI) — there is no organized group of workers that has less diversity, are less inclusive and are less equitable than federal workers when it comes to ideology.
We know from Bureau of Labor Statistics data that the quit rate in the federal government is only one-third as high as the quit rate for those who work in the private sector. In the private sector, it’s up or out. In Washington it’s nearly impossible to fire a worker.
The unions and the workers know how to play the employment game like a master chess player. Try to fire an incompetent or belligerent or chronically tardy federal worker and get ready for a blizzard of discrimination or wrongful termination lawsuits. It’s a well-honed racket.
For federal managers trying to do right by the taxpayers, it’s less stressful and less costly to keep the worst workers on the payroll.
It’s unfair and demoralizing to those dedicated federal workers – and there are hundreds of thousands of them – who truly want to serve the country and help people. But even they get sucked into a punch-the-time-clock reward system that merely encourages mediocrity.
Until now. Trump and Elon want a new highly professional civil service workforce. They want to fire the bad actors.
Why shouldn’t a federal worker face the same scrutiny and job performance standards that are routine in the private sector? That’s especially true when the employer is losing money – in this case to the tune of $2 trillion a year.
In his first term Trump tried to install a pay for performance standard in the civil service system. This would have greatly benefited the very best employees. But Trump – much like Reagan back in the 1980s got his head handed to him for “politicizing” the hallowed civil service system. It was man against machine and the machine won.
Trump wants to downsize a bloated federal workforce. This will lead to a leaner, more productive and customer responsive work environment. And maybe even one that is more diverse in its politics. It’s about time.
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.
The federal government owns multiple trillions of dollars of federal assets — from land, to buildings, to patent rights, to mineral rights, to immigrant visas, to oil fields to trucks and trains and unused office furniture equipment.
The government could earn well more than $1 trillion and perhaps as much as $10 trillion by selling off these assets that are simply hoarded (figuratively) in the dark and dusty basement of government buildings. These assets could then generate added annual tax receipts once they are utilized for productive purposes.
I’m not talking about selling the Washington Monument or Yellowstone National Park. The sales could and in most cases should be limited to American citizens and American businesses.
I’m referring to NON-environmentally sensitive properties that could be put to use growing our economy and using the money to retire some of our $35 trillion national debt. The sales could and should in most cases be limited to American citizens or businesses.
It’s a win-win for taxpayers, our children (who will be handed a lower debt obligation) and the U.S. economy.
One of the most valuable assets that should be put on the auction block immediately is tracts along the electro-magnetic spectrum. The spectrum contains the invisible airwaves that power mobile phones, Wi-Fi and other wireless technologies such as 5g communications.
In the past, auctioning spectrum rights to telecommunication firms and tech companies has raised more than $100 billion for the U.S. Treasury.
Congress could raise at least another $100 billion in another round of spectrum auctions. This would sell or lease space that the military doesn’t need and that other agencies of government (such as local police and fire departments) are fine without.
This strategy would help stimulate the economy in two ways. First, as in the past, the revenues raised can offset any real or imagined revenue loss from the imperative of making the Trump tax cuts permanent.
A new report by the economic consulting firm NERA, finds that auctioning 100 megahertz of mid-band spectrum that’s licensed for 5G will boost U.S. GDP by more than $260 billion, and create 1.5 million new jobs
On at least four previous occasions, Congress has used dollars raised from spectrum auctions to offset tax cuts in reconciliation packages. That’s exactly what they should do again.
“Effectively allocating spectrum to meet the ever-growing need is critical to promoting American innovation and protecting our national security,” Chairman Richard Hudson said yesterday at the first House Energy and Commerce Subcommittee on Communications and Technology hearing of the new Congress.
He points out correctly that the U.S. government has been conducting spectrum auctions for the past 30 years, and they have a track record of success. They are much fairer than giving bureaucrats the power to decide who gets spectrum, which can lead to allocations that are politically or ideologically motivated, with the result that spectrum would be used inefficiently (or not at all) by beneficiaries.
Auctions are open and transparent, minimizing the risk of shady backroom deals. They ensure that the spectrum goes to those who value it most and can use it most effectively.
Anyone who is concerned about ensuring the uninterrupted connectivity of our electric grid system and our daily Internet connection should be all for these auctions — especially as the world goes wireless and communicates less through cables and more through satellite beams.
This is also critical to maintaining our technology lead against the Chinese communist government. One Chinese news agency reported last July that, “China’s 5G network now covers every city and town in the country, as well as more than 90 percent of its villages.”
We are dangerously lagging behind and without timely spectrum auctions the gap will grow wider.
Auctions of the spectrum and other federal assets will drive progress and prosperity — and raise revenue to pay for tax cuts or retire our debt that is soon to eclipse $40 trillion. What’s not to like about that?
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. His latest book is “The Trump Economic Miracle.”
Shortly before his death in 2006, I had the privilege of interviewing Milton Friedman over dinner in San Francisco. The last question I asked him was: What are the three things we had to do to make America more prosperous?
His answer I have never forgotten: “First, allow universal school choice; second, expand free trade; third and most importantly, cut government spending.” That was long before Presidents Barack Obama and Joe Biden came along.
There are not too many problems in America that cannot be traced back to the growth of big and incompetent government.
It is notable that the two big bursts of inflation during modern times both occurred when government spending exploded. The first was the gigantic expansion of the LBJ “war on poverty” welfare state in the 1970s with prices nearly doubling, and then the post-COVID era spending blitz in the last year of Trump and then the Biden $6 trillion spending spree with the CPI sprinting from 1.5% to 9.1%.
Coincidence? Maybe. But I doubt it.
The connection between government flab and the decline in the purchasing power of the dollar is obvious. In both cases the Washington spending blitz was funded by Federal Reserve money printing. The helicopter money caused prices to surge. (I still find it laughable that 11 Nobel prize-winning economists wrote in the New York Times in 2021: Don’t worry, the Biden multi-trillion-dollar spending spree won’t cause inflation.)
The avalanche of federal spending hasn’t stopped even though COVID ended more than three years ago. We are three months into the 2025 fiscal year and on pace to spend an all-time high $7 trillion and borrow $2 trillion. If we stay on this course, the federal budget could reach $10 trillion over the next decade.
This road to financial perdition cannot stand. It risks blowing up the Trump presidency.
Upon entering office, Trump should on day one call for a package of up to $500 billion of rescissions — money that the last Congress appropriated but has not been spent yet. Cancelling the green energy subsidies alone could save nearly $100 billion. Why are we still spending money on COVID?
We could save tens of billions by ending corporate welfare programs — such as the wheel barrels full of tax dollars thrown at companies like Intel in the CHIPS Act. The Elon Musk Department of Government Efficiency is already identifying low hanging fruit that needs to be cut from the tree.
Along with extending the Trump tax cut of 2017, this erasure of bloated federal spending is critical for economic revival and for reversing the income losses to the middle class under Biden.
This is especially urgent because the curse of inflation is NOT over. Since the Fed started cutting interest rates in October, commodity prices are up nearly 5% and the mortgage rates have again hit 7% — in part because the combination of cheap money and government expansion is a toxic economic brew — as history teaches us.
Nothing could suck the oxygen and excitement out of the new Trump presidency more than a resumption of inflation at the grocery store and the gas pump. Trump’s record-high approval rating will sink overnight if the cost of everything starts rising again.
Cutting spending won’t be easy. The resistance won’t just come from Bernie Sanders Democrats. Trump will have to convince lawmakers in his own party — many of whom are already defending green-new-deal pork projects in their districts.
This is why Trump should make the case in his inaugural address that downsizing government is the moral equivalent of war. Borrow a line from Nancy Reagan: just say no — to runaway government spending. Say yes to what Friedman titled his famous book: “Capitalism and Freedom.”
Stephen Moore is a contributor to The Daily Caller News Foundation and a visiting fellow at the Heritage Foundation. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
