Julio Gonzalez joins Bill Mitchell on Your Voice on America's Voice News to discuss the tax poison pill trying to be injected in the HEROES Act.
Bill Mitchell 0:00
for tuning in, tonight, you can watch us on our periscope channel, our YouTube channel, your voice america.tv we're on America's voice network on Pluto TV on Dish Network on Apple TV on Roku boom, everywhere. We're all over the place, folks today I have with me a good friend of mine hooligans, Alice. He is a CEO of engineer tax services. And he's more more than just a CEO of his company. He is a big player in politics, especially on the tax side. If you like your tax cuts that you got from tax reform, you can thank this man afford he had a lot to do with making that happen. Julio, welcome to the show.
Julio Gonzalez 0:37
Hello, thanks for having me on. And it's been great to follow you and thanks for all you're doing for the country. It's been awesome.
Bill Mitchell 0:44
It's been a journey. What do we normally write three or four years now? It's amazing, amazing things that have taken place. Okay. Let's talk about something that's going on. Now. This is a little bit above my paygrade. Okay, so I don't understand taxes that well, but you do. There's something going on. That went on. In the the original tax reform, negotiations, and they're trying to bring it back as a result of this whole COVID 19th thing, you're trying to slip it in there. And you want to comment on that, because you think it's something that's it's kind of a poison pill. It's kind of a dangerous thing for America. So talk to us about that.
Julio Gonzalez 1:18
Bill, you know, when bills get done, every lobbyists gets up there and negotiates for whatever they'd like to see pass for their industry, right. So like, the halls are lined up with all these lobbyists. And at the same time, you get the congressman that tried to slip in just a little something that maybe no one will pay attention to. Right. And what are the reasons for that? So, like, no one follows all these things. It's hard to do at all, but again, as you remember, Congressman Brady, Larry Kudlow tax Foundation, put together a little momentum to bring back something I think you really brought out in 2000 16 that was really a nasty little poison pill for President Trump. And that's bringing back immediate expensing of real estate to the forefront, right. They would love to give the billionaires these expenses taken up front and, you know, give the billionaire's a little home run through this process. But obviously, that's not a good luck for President Trump for the party and certainly not Zehra a virus pandemic, right?
Bill Mitchell 2:24
Yeah, absolutely. Well, here's the problem. My understanding of this a layman's understanding of this is that if you are able to fully depreciate a building immediately, okay, then the depreciation value of that to your tax picture becomes greater than the intrinsic value of the building for its intended use, whether it be an office building, or apartments, and so on and so forth. So what happens is, you have this big building, boom, okay, of all they see through buildings and cities, when they build all these big office buildings and nothing is ever there because they're doing it for the tax break. And then you have a glut and it drives down the value of all the other real estate. And you end up with a lot of loans and banks that have made loans on this thing. And then they have to bundle those loans to reduce the risk. And then people buy derivatives and those the whole thing crashes down and creates this big disaster. Isn't that right?
Julio Gonzalez 3:15
Failure. Exactly. Right. And maybe you and I are just old enough to remember when we tried this in the 80s. right and right, and what happened disaster, the real estate crash, the SNL crisis crash and 20 years later, it took us to get it back. And why did we make those bad decisions? Well, we certainly made bad decisions, maybe unintended consequences came from it. And certainly we have to learn from that bill.
Bill Mitchell 3:38
Right, right. Absolutely. Well, here's the thing, that in any economy, the economy will always come back to something intrinsic value, whether it's a stock, whether it's a real estate, and the prices in a booming economy continue to rise based on speculation and that would be fine except for the fact that then banks start to lend money out That, and that becomes risky and they start to create derivatives to, you know, reduce the risk on that, and war and long, that intrinsic value of that original asset falls back to Earth to gravity. And then all the other stuff that's built on top of it comes crashing down, and they're trying to use, you know, letting no crisis go to waste. They're trying to use this new heroes act as a way to slip this back into the economy. And it's one of the nation's top tax experts. You see this as a as a big risk and something that might look good initially, but in the long run could be very bad for America.
Julio Gonzalez 4:34
Well, it's a massive wrecks, because it didn't work before. Right it yeah, it said what you said right, we had a bunch of empty buildings, even more so now, though, I mean, you know, our 90% of my employees ever coming back to the buildings or liking working from home, I think we have no norm I think there's not going to be this, you know, mass run to go build properties and go buy buildings if we get to immediately expensive except for the people that want to leverage it at night. percent in a big tax write off right without a little cash and a million dollars down get a $10 million, write off great tax ploy or gets write off all these buildings. Not a good look for the president in my mind. Now look, Bill, there's never anything that people aren't going to criticize the president for. But this one, I think just more than anything, is just over the top.
Bill Mitchell 5:22
Yeah, it is over the top. And as you said, you know, if you can, if you can buy a building, but just 10% down and take 100% depreciation on that in the first year, and your tax rates are like 28%, or whatever, it doesn't take a genius to figure out but that makes economic sense for you to do that. And it creates a huge speculative bubble in the real estate market. We've seen how dangerous that is. And we need to stay away from that, you know, it's good to have an economy that's a long, slow, steady economy. They talked about flattening the curve. Well, when the economy talk about economy, you want to flatten the curve. You want that economy to be long and slow and steady and based on real value is not too much speculation. Well, speculation is good. That's what capitalism drives. Well, you don't want too much speculation in there. Otherwise it becomes frothy, as they say. And it can become problematic. Okay, what can we do to make President Trump aware of this? Okay, I don't know President Trump is himself a tax expert, but he's got these experts around them. How can we make him aware of this, like we did back in tax reform, to make sure that he doesn't get get sucked in by this thing?
Julio Gonzalez 6:29
Well, fortunately, maybe he follows no one more than us. So hopefully, now you can put this out on Twitter, and I'm sure he'll say it. But really, most importantly, likes and he's a real estate expert. And he knows that obviously, this couldn't be good for the country, especially when it costs 2 trillion. That's what the tax foundation says it's going to cost us 2 trillion to do this. And, Bill, I don't think it's the quickest avenue to get people back to work, right. He president keeps saying let's do payroll, tax holidays. Let's do it. Climate tax credits to bring people back. let's eliminate the $600 a week everyone's receiving to stay at home. Right? Those are things we got to do a bill to give a ride off to go buy real estate, to places where no one's gonna go is ridiculous. And hopefully, you know, I think more Most importantly, you're, you're sharing this education because no other outlets gonna cover it right? No other media sources out there, they're not paying attention. They're, they just want to report on the popular things that are in the paper every day, right? You get to the nuts and bolts of them the details, the things that really could cost the party and I think thank goodness that you're doing that.
Bill Mitchell 7:41
Well, this is this is one of the things that people want to push this sort of thing through are working under the assumption This is too esoteric for the average person to get okay. This is not like a train wreck or a car accident that side of the road. Okay, this is a little more wonkish than the average person can get. And that's what we need to get the message out so they will understand that we Don't want to have another situation where we have a real estate bubble in the economy because this can cause lots of things to crash down. We don't want too much speculation, some speculation is good. We want the right kind of speculation. We want speculation because people think the intrinsic value of that asset will increase over time, not because they're just some big tax break, because that's kind of that's kind of fake. And we don't need fake stuff in our economy. Let me ask you this. Who are the key players that are involved in this, who's out there proselytizing for this and trying to get this to go through?
Julio Gonzalez 8:34
Well, you know, the same bad characters really. I mean, you got Kevin Brady out there that, you know, just, you know, still can't separate himself from Ryan and the tax foundation and all the relationships there. And, you know, and and, and try to, well, look, Bill, President Trump is so trusting, right. He brings in all these people trust people in this party that we know we know that everyone has their On agenda, and everyone would love to slip in their little poison pill or a recording or a video or whatever. And here's another, another attempt at it. And it you know, you're the only one that's going to report it. So thank goodness.
Bill Mitchell 9:17
Yeah, well, we'll get this out there. And I'll put that out there. My Twitter feed my Twitter feed does about 150 to 250 million hits a month now, which is a lot of people. And a lot of views on it. Yeah, President has been gracious enough to retweet me, I think 12 or 13 times in the last last couple of weeks. So it does help. It does help and we are getting the message out there. And I tell you what, this is a you know, one of the reasons I believe Paul Ryan is a longer speaker because the powers that be the people who was answering to wanted him to get this to go through when it failed. I think they pulled the plug on.
Julio Gonzalez 9:52
Absolutely right. And Bill, I want to mention something because you talked about the banks right in the 80s crisis, right when you have a loan, go back because someone's buying it just for tax purposes, right, right. So now the bank has to reserve dollar for dollar that loan, right? But what happens when they reserve they have to reserve $40 of deposits, right. And that's what happened in the crisis. All of a sudden, all these loans had to go to reserve, all this money times 40 comes out of the system so that no one can grow their company, small businesses, especially right. And that's really where the disaster comes in. I think you were mentioning that. And I just want to highlight that again, because it just starts with one bad real estate loan because someone's buying something for tax purposes. I'll borrow a million, I'll get a $10 million write off and then who cares if I pay the loan or not right? And but what happens is, you know that those dollars get taken out of the system for every other small businesses, right?
Bill Mitchell 10:50
The little guy ends up holding the bag as they say, at the end of the
Julio Gonzalez 10:53
Bill Mitchell 10:54
We have a man left. How can people the average person who's watching this show today How can they react to this? They call a congressman to their red letter to somebody, you know, how can we get the people rising up about this? So this doesn't take place?
Julio Gonzalez 11:10
Yeah, I think the congressmen are listening go. I do think that I talked to Senator Rand Paul, certainly. He was on my side. I've talked to Steve more this week. Certainly he understands it. You know, he said he would talk to Larry, and maybe aren't up there. You know, so we're getting the message out. I mean, the average real estate owner understands that their value is going to go in half when all the bankruptcies go into foreclosure. So that's not good for the real estate market. So those people get it as well. But right, I think you're right on bill, it to the Congressman, let them know that, you know, this is just not acceptable. Or maybe I'll put out an ad I'll have them sign it. I'd love to do that.
Bill Mitchell 11:49
Good. Well, let's be active about this, folks. This has been hooligans, Zola's a great friend of mine, he co engineered tax services, and a real activist on the tax side. If you like your tax cuts, he's one of them. Guys you can thank for that. Julio. Thanks for coming on the show.
Julio Gonzalez 12:02
All right. I appreciate