What Does The Senate Tax Bill Do?

Investor’s Business Daily posted an article yesterday detailing the tax cuts under the Senate Tax Bill currently being considered.

The article takes on some of the fiction about the bill currently being reported:

The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes. That’s the official conclusion of the Joint Committee on Taxation. So why are Monday’s headlines screaming that the tax cuts would make the poor much worse off?

“Senate GOP tax bill hurts the poor more than originally thought, CBO finds.” That’s the headline in the Washington Post describing a Congressional Budget Office report released on Sunday.

The story claims that the “Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off.” Later, the Post story talks about the bill’s “harsh impact on the poor.”

The article explains why that story is false:

First of all, the CBO doesn’t describe the Senate bill as being “harsh” to the poor. That’s the spin put on by the reporter.

The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.

But note the word “spending” above. Since this is a tax-cut bill, why is “spending” part of the calculation at all?

That’s in there because the CBO includes the spending impact of the Senate bill’s repeal of ObamaCare’s individual mandate.

The CBO numbers assume that if the mandate is gone, people will drop their insurance. It does not consider the fact that many people pay the fine rather than the high cost of insurance. The tax bill returns the freedom to consumers to make their own choices about health coverage.

The article also includes a chart of tax savings (looking only at the tax cuts and savings in the tax bill):

If the tax cuts are passed, we can expect economic growth to return to our previous normal of about 3% (or more). We can expect people to leave welfare and join the work force because of a booming economy that results in higher wages. If the tax cuts fail, we can expect a Democratic Congress that will raise taxes, slow economic growth, and spend its time trying to impeach President Trump. It’s up to Congress to make the choice.

One Way To Save Taxpayers’ Money

The following is a press release from Congressman Steve King:

King, Colleagues Want King’s Commonsense “New IDEA” In “Tax Cuts and Jobs Act”

Nov 6, 2017

Press Release

Congressman Steve King announces today that he is asking Chairman Kevin Brady of the House Ways and Means Committee to include King’s New IDEA (Illegal Deduction Elimination Act) legislation as a component of H.R. 1, the Tax Cuts and Jobs Act. King’s legislation, HR 176- The New IDEA Act, amends the Internal Revenue Code to make it unlawful for employers to deduct wages and benefits paid to and on behalf of an illegal alien. New IDEA also makes the federal E-Verify Program permanent. King, joined by 11 of his colleagues, made the request in a letter sent to Chairman Brady today.

Including this legislation in the Tax Cuts and Jobs Act is the right action for the American taxpayer—it preserves the rule of law and provides a significant tax savings.  The Center for Immigration Studies (CIS) has estimated that eliminating deductibility for unlawful employment would increase federal tax revenues by approximately $25.4 billion per year, which is $254 billion over 10 years.  This amount more than pays for any increase in the deficit over the limit set by reconciliation.

As we continue to debate the merits of this bill, and attempt to establish a more equitable system of taxation while ensuring that it does not contribute to our nation’s fiscal challenges, I can think of no better single piece of legislative language to include in this landmark tax bill.”

The signatories to King’s letter asking King’s New IDEA be included in the tax reform legislation include: Rep. Louie Gohmert, Rep. Paul Gosar, Rep. Mo Brooks, Rep. Matt Gaetz, Rep. Andy Biggs, Rep. Randy Weber, Rep. Lou Barletta, Rep. Scott DesJarlais, Rep. Duncan Hunter, Rep. Brian Babin, and Rep. Scott Perry.

This is one of the best ideas to reform taxes and to begin to deal with the problem of illegal immigration that I have heard. E Verify would be a big step toward making sure that the workers in America are here legally.

The Heritage Foundation’s Analysis Of The Proposed Tax Plan

Below is the Heritage Foundation‘s analysis of the proposed tax plan:

Months ago, conservatives began pressuring their lawmakers to ensure that tax reform followed five conservative principles. Here’s how the bill stacks up to those principles:

Lowering and Simplifying the Individual Tax Rates: The GOP proposal provides long overdue relief to millions of Americans by simplifying and lowering the individual tax rates to 12 percent, 25 percent, 35 percent and 39.6 percent. For married couples, the 25 percent rate starts at $90,000, the 35 percent rate starts at $260,000 and the top rate starts at $1 million. The bill will also double the standard deduction to $12,000 for individuals and $24,000 for families.

Lowering the Corporate Tax Rate: This bill will immediately lower the corporate rate to 20 percent — the rate demanded by conservatives for months — making American businesses more competitive with the rest of the world and providing hard working Americans with a much needed raise. Rates for small business pass throughs were also reduced by 15 percentage points, down to 25 percent.

Tax Free Entrepreneurship (Full Expensing): The GOP proposal includes full expensing for some investments that phases out after 5 years. This is a necessary boost to investment in the short-term, though improvements could be made as the process advances.

Establishing a Territorial Tax System: This bill attempts to eliminate the double taxation that defines our current worldwide tax system, though there are some provisions that could undermine the full value of that reform. Stay tuned for a more in-depth analysis.

Ending Cronyism in the Tax Code: Conservatives have also been fighting back against big-government special interest groups. The plan eliminates many special interest provisions including the State and Local Tax Deduction (SALT), though it allows a write off for property taxes. If not for conservative pushback, the swamp creatures would have been far more successful in defending the broken, corrupt status quo.

Here are some other things included in the bill you should know:

  • Child tax credit goes to $1600 from $1000 plus additional $300 credit for parents and non-child dependents.
  • State and local deduction converted to property tax deduction with $10K cap
  • 401k’s are untouched
  • The Death Tax exemption will be doubled and eventually phased out after five years.
  • Preserves the home mortgage interest deduction for current mortgages and limits the deduction to $500,000 for new mortgages.
  • Preserves the Charitable Tax Deduction.

At first glance, the preliminary text released today has the potential to unleash economic growth, create American jobs, increase wages for American workers, allow families to keep more of their hard-earned money, and make U.S. businesses competitive across the globe.

According to documents released by Republicans on the House Ways and Means Committee, a typical middle-income family of four, earning $59K (median household income), will receive a $1,182 tax cut under this bill.

Cleaning Up The Federal Taxes And The Federal Budget

Yesterday The Washington Times posted an article about one aspect of the tax bill that will limit fraud and save the taxpayers billions of dollars.

The article reports:

The new GOP tax overhaul would strip illegal immigrants of the ability to claim several major tax credits, saving the government $23.1 billion over the next decade, according to the bill’s authors.

For years Republicans have complained that despite a general ban on taxpayer benefits flowing to illegal immigrants, the IRS has allowed them to collect the child tax credit, the American Opportunity Tax Credit and the Earned Income Tax Credit.

…But the new tax overhaul tries again, calling for taxpayers to have to submit work-eligible Social Security numbers in order to claim the credits.

Immigrant-rights advocates have complained about attempts to close the tax credits in the past.

In the case of the child tax credit, activists say that while the parents may be in the country illegally, their children are often U.S. citizens who deserve the credit.

…Many illegal immigrants pay taxes using Individual Taxpayer Identification Numbers, which the IRS issues to those who aren’t authorized to work in the U.S., but whom the government still wants to pony up to Uncle Sam.

The IRS pays out billions of dollars a year in tax credits to people filing using ITINs each year, according to the agency’s inspector general.

The inspector general has repeatedly urged the IRS to stop making the payments, but the agency has refused, saying it interprets the law related to those tax credits to cover illegal immigrants as well as other taxpayers.

The obvious question is why is the government making payments to people who are not in America legally and have no right to work here.

Some Facts About The Republican Tax Plan

The first fact to remember about the Republican tax plan is that what is eventually passed by Congress will be different than what was introduced today. How different we don’t know, but it will be different.

The Daily Signal posted an article today highlighting some of the proposed plan. The plan would simplify taxes, lower income tax rates, and positively impact business taxes.

The article reports:

The tax reform package would simplify and lower the current tax rate structure, from seven different rates ranging from 10 percent to 39.6 percent, to four rates: 12 percent, 25 percent, 35 percent, and 39.6 percent.

Most low- to middle-income earners would face lower marginal tax rates, which would help encourage more work and also put more money back into taxpayers’ pockets to spend more productively than the federal government.

Unfortunately, the plan maintains the top marginal rate of 39.6 percent (which reaches 43.4 percent when factoring in the Obamacare surtax).

While only 1 of every 150 taxpayers actually pays the top rate, more than 1 of every $5 of taxable income is subject to that tax rate. That means a lot of economic activity is affected by the top rate, and lowering it would have a significant and positive impact on investment, productivity, incomes, and job growth in the U.S.

Maintaining a high top rate for wealthy Americans may make the plan more politically palatable, more appealing to average Americans, and help reduce the alleged “costs” of the tax reform plan. In reality, though, it would not result in nearly as much revenue as static estimates project, and it would limit the plan’s ability to maximize job growth and boost incomes for everyday Americans.

One aspect of the tax plan that is going to meet with a lot of resistance is the change to state and local tax deductions.

The article explains:

The proposed tax plan would partially eliminate state and local tax deductions by getting rid of the deduction for income or sales taxes, and by capping the deduction for property taxes at $10,000.

State and local tax deductions provide no economic benefit. In fact, they are outright detrimental to the economy.

By allowing those who itemize their taxes to deduct property taxes as well as income or sales taxes they pay to state and local governments, these deductions shift the burden of high-tax states onto low-tax states, and spread a portion of high-income earners’ taxes onto lower- and middle-earners’ tax bills.

For example, just seven states (California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut) receive more than 50 percent of the value of the state and local tax deductions.

And on net, the average millionaire receives 102 times as much benefit from the state and local tax deductions as a typical household that makes between $75,000 and $100,000.

Eliminating the sales and income tax deductions would be a huge benefit to at least 85 percent of Americans.

Please follow the link above to read the entire article. It explains how each part of the tax plan would impact families in all income brackets. What we are hearing in the mainstream media is not necessarily accurate.

 

 

Taxes Have Consequences

For some unknown reason, politicians love to spend other peoples’ money. And they love to raise taxes to get more of other peoples’ money to spend. However, raising taxes does not always work–sometimes it has unforeseen consequences. The Laffer Curve taught us that.

Last Friday, Investor’s Business Daily posted an article about the soda tax in Philadelphia. It just hasn’t gone as predicted.

The article reports:

That 1.5 cents per ounce doesn’t sound like a lot, but it is. The Tax Foundation notes that it’s “24 times the Pennsylvania excise tax rate on beer.”

“The high tax rate on nonalcoholic beverages makes them more expensive than beer in some cases,” the nonpartisan think tank wrote.

Some people, suddenly facing absurdly high costs for colas, root beers and other soft drink favorites, are turning to alcohol instead.

Probably not what was envisioned with the tax. And the tax has been put on diet drinks as well as sugared ones. So, if they had hoped to alter people’s consumption away from sugar-filled soda toward less-unhealthy, non-sugared alternatives, it was a failure.

Tax increases never sound like much–they are sold that way. Remember the luxury tax that went into effect in 1991 that nearly killed the boat industry. The tax was only supposed to impact the rich, but it caused a serious recession as the impact of the tax began to trickle down.

The article at Investor’s Business Daily further reports:

“Beverage tax collections were originally promoted as a vehicle to raise funds for prekindergarten education,” the Tax Foundation said, “but in practice Philadelphia awards just 49% of the soda tax revenues to local pre-K programs.” The majority of the money goes to government employees’ benefits and local schools that already have funding.

…the tax didn’t bring in the money the city thought it would. The city budgeted a “conservative” $46.2 million in revenues from the tax for fiscal 2017. At current projections, they’ll come up $6.7 million short. Many people are leaving Philly to do their shopping, while others have switched to other beverages, leaving a big unexpected hole in the tax revenue estimates.

“In July, city officials lowered beverage tax revenue by 14%, leaving the prekindergarten programs that the tax promised to fund in jeopardy,” the study said.

Meanwhile, local Coca-Cola and PepsiCo operations laid off nearly 150 workers and pulled some brands off Philly shelves. And angry local businesses are suing the city over the tax.

Raising taxes is never the answer. Cutting spending usually is.

The Need For Fiscal Responsibility In Washington

Yesterday The Washington Times reported that the Internal Revenue Service was extremely generous with taxpayer money–paying millions of dollars in refunds to people who were not legally entitled to them.

The article reports:

The IRS doled out more than $24 billion in potentially bogus refunds claimed under several controversial tax credits in 2016, according to a new audit that said $118 million was even paid to people who weren’t authorized to work in the U.S. in the first place.

Some $16.8 billion in payments were made on improper claims under the Earned Income Tax Credit, signifying a 24 percent error rate. Investigators also estimated $7.2 billion in improper payments for the Additional Child Tax Credit, representing 25 percent of the total, and $1.1 billion in improper payments, or 24 percent, for a higher education tax credit.

The totals and error rates for the earned income and child credits were comparable for 2015, while the education tax credit saw improvement.

The article explains that Congress passed a law in 2015 that was supposed to curb payments to people who were not entitled to them.

The article reports:

Both the inspector general and the tax agency said that steps have already been taken to try to prevent a repeat in the future, saying that a law passed in late 2015 should help.

Treasury Inspector General for Tax Administration J. Russell George said the IRS needs to follow through on the 2015 law, which imposes more restrictions on certain filers and delays refunds for people claiming the credits to give agents more time to flag suspicious returns.

One particular problem the IRS faces is checking people who have Social Security numbers but who aren’t authorized to work in the U.S.

This is one place that the federal budget could be easily cut. Tax refunds should only go to the people entitled to receive them.

 

Bringing The Federal Budget Under Control

The Washington Examiner reported yesterday that one of the steps President Trump will be taking to help balance the budget next year will be reining in tax payments to illegal immigrants.

The article reports:

Trump’s fiscal 2018 budget, set to be released Tuesday, will set higher eligibility standards for the earned income tax credit and the child tax credit, Office of Management and Budget Director Mick Mulvaney said Monday. According to the administration, the measures will save $40 billion over 10 years.

In May 2014, The Washington Examiner reported:

The Treasury Department has released its latest report on the fight against widespread fraud in the Earned Income Tax Credit program. The problem is, fraud is still winning. And there’s not even much of a fight.

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

There is no reason to continue funding tax fraud.

The article concludes:

Some anti-illegal immigration groups have said that allowing workers to claim credits without providing a Social Security number amounts to paying illegal immigrants to stay in the country. Conservative lawmakers also have favored tightening the restrictions as a matter of fiscal conservatism.

Liberal groups, though, argue that illegal immigrants pay taxes, such as payroll taxes for Social Security, for which they won’t get benefits. More generally, the low-income tax credits generally benefit needy families, even if they technically did not qualify for the benefits they received.

Why are we running huge budget deficits to pay benefits to people who are not eligible to receive them? This doesn’t make sense to me. It would be nice to see that change.

It’s Not The Income–It’s The Spending

CNS News posted an article today about the tax revenue the government has received in the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March). The government has collected $7,387,280,000 more in income tax revenue in the first six months of fiscal 2017 than were collected in the first six months of fiscal 2016.

The article reports:

The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.

Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017. (The emphasis is mine)

No matter how much money we give them, it will never be enough. We need a budget (not continuing resolutions) that does the things that are constitutional for the federal government. All other functions need to be left for the states (as stated in the Tenth Amendment). Spending cuts are needed.

Remember The IRS Scandal? It Just Got Worse

Yesterday The Washington Free Beacon posted an article about the IRS Scandal of targeting tea party groups and their members.

The article reports:

The Internal Revenue Service has located 6,924 documents potentially related to the targeting of Tea Party conservatives, two years after the group Judicial Watch filed a Freedom of Information Act lawsuit for them.

The watchdog group intended to find records regarding how the IRS selected individuals and organizations for audits that were requesting nonprofit tax status.

The agency will not say when it will make the documents available to the public.

“At this time, the Service is unable to provide an estimate regarding when it will complete its review of the potentially responsive documents,” the agency said. “The Service will begin producing any non-exempt, responsive documents by March 10, 2017, and, if necessary, continue to produce non-responsive records on a bi-weekly basis.”

The IRS needs to be cleaned up from top to bottom. I am sure there are good people doing their job at the IRS, but it has become obvious that the agency has become politicized in recent years. The best solution would be to abolish the IRS and go to a use tax that did not require monitoring by the IRS.

Getting On Board With Building The Wall

Yesterday The Hill posted an article sharing some news about the wall Donald Trump plans to build on the southern border of America.

The article reports:

…The Hill reported late Tuesday that 225 companies — mainly construction and engineering firms — have voiced interest in building Trump’s proposed wall.

The list was compiled from a website for contractors interested in doing business with the federal government.

Contractors intrigued by the project have until March 10 to submit a prototype concept paper, followed by a formal request for proposal by March 24.

Interested parties so far include construction companies like Caddell and Raytheon, a top defense contractor.

A number of small businesses have also applied, including 20 owned by Hispanic-Americans who could come under scrutiny for helping create the structure.

…The Department of Homeland Security estimated last month that Trump’s could take 3.5 years to complete and cost up to $21.6 billion.

In November 2014, I reported:

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

Fixing that problem would provide a major portion of the cost of building the wall. I am sure there are other costs to illegal immigration that could also be eliminated to pay for the wall.

Ronald Reagan said it best:

“A nation that cannot control its borders is not a nation.”
Ronald Reagan

Another Way To Interfere With The Profit Margins Of Businesses

What you are about to read is not the most ridiculous thing I have ever heard, but it is definitely close.

Yesterday The New York Post posted an article about a recent statement by Microsoft founder Bill Gates.

The article reports:

Bill Gates, the co-founder of Microsoft and world’s richest man, said in an interview Friday that robots that steal human jobs should pay their fair share of taxes.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, Social Security tax, all those things,” he said. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

How do you tax a robot? If he doesn’t pay his taxes, do you take out his battery?

This is another example of the government interfering in the free market. As some people in the government push to raise the minimum wage, certain businesses will have no choice but to replace human workers with robots.

The article further reports:

Recode, citing a McKinsey report, said that 50 percent of jobs performed by humans are vulnerable to robots, which could result in the loss of about $2.7 trillion in the U.S. alone.

“Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now,” Gates said. “Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.”

Another example of the government finding new ways to take money away from people who have earned it.

The Government Doesn’t Need More Tax Revenue–It Needs To Cut Spending

CNS News reported the following today:

The federal government brought in a record of approximately $213,300,000,000 in individual income tax revenues through the first two months of fiscal 2017 (Oct. 1, 2016 through the end of November), according to the Monthly Treasury Statement released today.

That is approximately 36 times the $5,966,000,000 the federal government brought in from customs duties imposed on foreign imports over the same two-month span.

In constant 2016 dollars (adjusted using the BLS inflation calculator), the record $213,300,000,000 in individual income taxes the Treasury raked in during October-November of this year was up $6,432,550,000 from the $206,867,450,000 it brought in October-November of last year.

Meanwhile the website usgovernmentdebt.com posted the following:

The tax revenue is going through the roof and the deficit is rising. Would you run your household budget this way?

Did You Know About The Belly Button Tax?

Yesterday the Wall Street Journal posted an article about the debate over the Belly-Button Tax in Obamacare. Yes, you read that right. There is a tax on every person covered by an insurance plan–policy holder, spouses, and children. This has become known as the belly-button tax.

The article reports:

It’s paid by every company that provides insurance — big businesses, organized labor, and insurance carriers. The likely beneficiaries of the compensation fund, though, are just the traditional insurance carriers, who will become required to sell coverage to everyone, regardless of their medical history.

Large employers and unions have fought hard to get an exemption, saying the levy is unfair because they don’t directly benefit from the fund. Insurers say it’s an important fee they need to keep.

If you are going to require insurance companies to insure everyone regardless of pre-existing conditions, you need to find a way to keep them from going bankrupt. We need to remember that companies are in businesses to make money. If they are not able to make money, why should they stay in business? The International Economic Development website reports that the profit margins for health insurance companies is about 3 percent. They rank about 88 among 215 industries as far as profit margins go. That profit margin is not overly large–these companies don’t have a lot of wiggle room to accommodate the federal government seriously impacting their profits. I don’t support ObamaCare, but if you are going to have ObamaCare, you need a belly-button tax.

ObamaCare does not make sense economically or otherwise. It will eventually collapse under its own weight. We just need to make sure it collapses before it totally destroys healthcare in America.

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Happening In Massachusetts

If you are upset that the gasoline tax in Massachusetts is now indexed to inflation, here is how you can change that:

TANK THE AUTOMATIC GAS TAX HIKES

 

FOR IMMEDIATE RELEASE                                               August 6, 2013Contact: Holly Robichaud
781-378-1798

 

TANK THE AUTOMATIC GAS TAX HIKES

 

Ballot Initiative Will Stop Taxation Without Representation

Boston, MA…Today a group of taxpayers gathered on the outside State House stairs to announce that they are filing a ballot initiative to cut the linkage between the gas tax and inflation which the legislature recently passed.

“It is outrageous that Beacon Hill is increasing our gas tax every year for the rest of lives without a vote.  That’s taxation without representation.  It is wrong and we are going to stop it,” said Steve Aylward, who is the Republican State Committee man that ran the very successful signature drive for Mike Sullivan last winter.

The initial supporters of the ballot initiative include Marty Lamb, Chris Pinto, Republican National Committee woman Chanel Prunier, Les Gosule who passed Melissa’s law in 2012, Jeff Bailey, State Representative Leah Cole, Stephen Coulter, Alex Vispoli, State Representative Geoff Diehl, State Representative Jim Lyons, State Representative Marc Lombardo, Rick Gleason of the Massachusetts Motorcycle Association, Rich Howell, Paul Craney of Mass Fiscal, Desiree Awiszio, Jamie Kang, Mike Mosca, Marylou Daxland, Katie Regan, State Representative Shaunna O’Connell, John O’Mara of the Northborough Tea Party, Barbara Anderson of Citizens of Limited Taxation, and many more.

Last month the legislature passed the so-called transportation bill which included a gas tax hike, a new tax on computer software, and a cigarette tax increase. It also linked the gas tax to CPI which allows the gas tax to increase every year without a vote of the legislature.

“This year our state took in over $600 million above projections.  We don’t need this tax package.  I voted against this bill in the House and I am not going to sit on the sidelines now while the state reaches into our wallets every year for the rest of our lives for more and more money without an accountable vote being taken,” said State Representative Diehl.

“How much more will Beacon Hill take from our wallets?  We don’t know.  We just know it is going up automatically with no debate, no input and no oversight,” said Pinto. 

“Our elected officials have failed us.  Our only alternative is to pass a ballot question that will stop this taxation without representation,” said Marty Lamb. 

The attorney for the group is former U.S. Attorney Mike Sullivan.

Since launching the facebook page last week the group has over 695 friends.  The plan is to launch a website shortly in preparation for collecting  100,000 raw signatures. 

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The Tax Increases In Massachusetts Take Effect Today

CBS Boston reported today that Massachusetts is increasing taxes on gasoline and cigarettes (effective today) and adding a 6.25% sales tax on computer software services.

The gasoline tax in increasing 3 cents a gallon, it will now be 24 cents a gallon, and the cigarette tax will be increasing $1 to $3.51 per pack.

On Monday, The Examiner reported:

Massachusetts made state history July 29th by implementing a new gas tax increase that is pegged to inflation. The new tax that takes effect Wednesday, following an override of Governor Patrick’s veto, adds 3 cents to the state’s already relatively high 21 cents per gallon tax. Adding in federal taxes, the total tax on a gallon of gasoline in Massachusetts is now 42.4 cents per gallon. Depending upon which grade is chosen, drivers now pay about 11 percent in taxes for the gas they use. That is the highest tax rate of any product one can buy in Massachusetts except cigarettes. Smokers also saw a one dollar tax increase per pack in this new bill.

Please note–THE GAS TAX INCREASE IS PEGGED TO INFLATION. This means that elected officials in Boston can avoid responsibility for future tax increases. The tax on gasoline will automatically increase, and the legislators can say, “I didn’t do that–it was automatic.” Governor Patrick vetoed this bill–therefore he can claim that he did not vote for the tax increases in it (of course he knew that the Democrat legislature would override his veto and still be voted back into office in the next election).

Until the Massachusetts voters begin to vote the current legislators out of office, they can expect more of this kind of shenanigans. It’s time to wake up and put people in office who actually care about the burden they are placing on taxpayers.

 

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How Much Is Enough?

Will there ever come a time when the government feels that it has enough money to run the country, the state, or your town? I am beginning to wonder.

Holly Robichaud at the Boston Herald posted an article today about the tax bill passed by the Massachusetts House yesterday. While reading the details of this bill, please keep in mind that state revenue is presently $575 million above predictions. So what did the House do? They raised taxes!

The article reports:

How much are taxes going up?  Bacon Hill says $500 million.  Do you trust them?  $500 million is just the first year.  This is a tax package on steroids.  It gets bigger every year with no end in sight. 

Bacon Hill indexed the gas tax to inflation which means it will increase every year.  This year it is an additional 3 cents.  Next year it will increase again and the following year and the following year and the following year…..  It is the gas tax increase to infinity and beyond. 

Bacon Hill also tied the tax on underground storage tanks to inflation.

The cigarette tax is going up $1 per pack.  This is a direct attack on poor people. 

Unless the voters of Massachusetts change the way they vote, we can expect to see more of the same.

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Avoiding The Negative Political Consequences Of Raising Taxes

Marty Lamb, a Massachusetts small business owner, posted an article at the Holliston-Hopkinton Patch yesterday about the coming hikes in the Massachusetts gasoline tax. The article was entitled, “To Infinity and Beyond” and stated the following:

Just within the last week, the price of gas has increased 10 cents per gallon

The new normal is over $3.50 per gallon. This high price is stretching family budgets.  Whether it is filling up at the pump or buying food trucked to the market, we are getting hit hard in the wallets.

The situation is going to get worse if Beacon Hill lawmakers have their way.

Right now, a committee consisting of 3 House and 3 Senate members are meeting to negotiate the differences between the two tax bills. It is not a matter if the gas tax is increasing it is a matter of how much and how often.  

What do I mean?  

If the tax package is signed into law the gas tax will be forever linked to inflation.  It is the gas tax increase “to infinity and beyond.”  In other words, there will be an automatic gas tax increase every year. And the legislature never has to vote to raise it again.  How convenient.  But for the rest of us, it means taxation without representation.  

There is no need for higher taxes.  This week’s report from the Auditor shows close to $100 million in fraud just within the Department of Transitional assistance (welfare).  The crime lab scandal is costing us $332 million. Overall it is estimated $1.8 billion of waste.  

I urge readers to call the State House (617-722-2000) and express their opinion on the gas tax.  There is no need for the tax increase and it should not be automatic.  Taxation without representation should not be tolerated.

If the bill being discussed is passed, the State of Massachusetts can automatically raise gasoline taxes without a vote by the legislature. Therefore, no one has to go on the record and be held accountable for the tax increase. This is a liberal lawmaker’s dream and a taxpayer’s nightmare.

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I Guess This Shouldn’t Be A Surprise

On Friday, Forbes Magazine posted an article about the Affordable Care Act’s (ACA) health insurance tax. I hate to admit it, but this is news to me. I didn’t realize that there was an entire new group of taxes in Obamacare that will impact the middle class and the elderly.

The article reports:

…the tax increases that remain on the books will cost taxpayers more than $675 billion over the next ten years. Chief among these will be the sales tax on the purchase of health insurance, totaling $101.7 billion, and making it larger than all the other industry-specific taxes combined.

The article concludes:

In fact, Medicare Advantage beneficiaries will see costs rise from $16 to $20 per member per month in 2014 – increasing to between $32 and $42 by 2023. The costs for Medicare Advantage coverage over the next ten years is expected to reach $3,590. Individuals on Medicaid managed care will see increase costs on an average of $1,530 per enrollee between 2014 and 2023.

The Congressional Budget Office (CBO) supports Ignagni and Goodman’s warnings, stating that the health insurance sales tax will be “largely passed through to consumers in the form of higher premiums.” Unfortunately, as Goodman predicts, “this is only one example of many middle income taxes buried in ObamaCare.” The time to repeal and replace is narrowing, with just months now separating us from another massive tax hike that Americans cannot afford.

This is one more reason to repeal Obamacare. I suspect there may be a lot of Democrats at this point complaining that this is not what they signed up for. If it is what they signed up for, they should be voted out of office.

 

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Losing Revenue By Raising Taxes

Hot Air is reporting today that the Midland, Mich.-based Mackinac Center has released a report stating that in 2011 New York had the highest cigarette smuggling rate in America. In 2006, when the cigarette tax was $1.50 a pack, New York was the fifth highest. In 2008, the tax went to $2.75 a pack, in 2010 it went to $4.35 a pack. That increase was enough to move New York from fifth place to first place in the number of cigarettes smuggled into the state. It is now estimated that 60.9 percent of all cigarettes smoked in New York are not taxed there!

What can we learn from this? Simple. People don’t like to pay taxes and will do almost anything to avoid them. Some state is making money on the sale of these cigarettes–it’s just not New York. New Hampshire seems to be where most of the smuggled cigarettes are coming from–New Hampshire does tax cigarettes, but only $1.68 a pack. I suspect New Hampshire collects more revenue from its lower tax than New York does from its higher tax. Maybe we could learn from that.

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Reaping The Rewards Of A Well-Run State

Reuters reported yesterday that Louisiana Governor Bobby Jindal has proposed a plan to simplify Louisiana’s tax code to make it more friendly to business. The Governor’s plan is to eliminate all corporate and personal income taxes in a way that would be revenue neutral.

The article reports:

But political analyst Maginnis (John Maginnis) questioned whether the Republican-majority Louisiana legislature would endorse Jindal’s ambitious plan.

“Any tax increase (such as sales tax) or elimination of exemptions would require a two-thirds vote, a form of legislative approval that would require (Republican) solidarity and significant Democratic support,” Maginnis said.

Jindal said his team will meet with lawmakers soon to discuss details of his tax reform plan.

“Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs,” he said.

There an important lesson in this idea. Raising taxes slows economic activity and does not necessarily result in an increase in tax revenue. Lowering taxes increases economic activity and often results in increased tax revenue.

During the 1980’s President Reagan lowered taxes. This resulted in an increase in revenue taken in by the government. Because the Democratic congress never kept their promise to cut spending, the federal deficit did not decrease, but federal revenue did increase.

Lower taxes mean more economic activity. Washington needs to learn that lesson.

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What Did The Fiscal Cliff Deal Really Accomplish ?

Investors.com posted an article today about what the deal reached on the fiscal cliff this week will actually accomplish. Not much.

The article states that the tax hikes will hurt the economy. Specifically:

Moody’s Analytics chief economist Mark Zandi says the higher taxes on the wealthy and the increase in payroll taxes will shave close to 1 point off GDP growth this year and result in 600,000 fewer new jobs.

Pantheon Macroeconomic Advisors chief economist Ian Shepherdson figures the deal will cut GDP by 1.5 points. And Gallup’s chief economist Dennis Jacobe says the deal has created a “higher probability of recession — just the opposite of what fixing the fiscal cliff was intended to do.”

The article also points out that the increased taxes will not actually help shrink the deficit. Included in the article is the following chart:

Any answer to the debt crisis must include cuts in government spending in order to work. Americans are waiting for the President to propose a plan to shrink government. If President Obama fails to do that, he will lose the support of the public. If he does propose a plan for smaller government, he will lose the support of his party (and a large part of the Republican establishment).

Tax hikes don’t necessarily raise the money that those who pass them think they will. For instance:

President George H.W. Bush‘s tax hikes in 1990 generated $135 billion less than expected. And revenues as a share of GDP came in lower than predicted after Clinton’s tax hikes went into effect.

The article concludes that because President Obama has added more brackets to the tax code, it will be harder to reform. I’m not sure that is an accident.

At any rate, we survived a Congress-created crisis and are about to face another one (the debt ceiling). It would be nice to believe that there are enough grown-ups in Congress to create a long-term solution to our overspending, rather than to simply put a band-aid on a broken arm.Enhanced by Zemanta

Borrowed From A Friend On Facebook

Alan Simpson, the Senator from Wyoming calls senior citizens the Greediest Generation as he compared “Social Security ” to a Milk Cow with 310 million teats. Here’s a response in a letter from PATTY MYERS in Montana … I think she is a little ticked off! She also tells it like it is! This goes for both the Democrats and the Republicans and is right on the money!!! (so to speak)
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“Hey Alan, let’s get a few things straight!!!!!

1. As a career politician, you have been on the public dole (teat) for FIFTY YEARS.

2. I have been paying Social Security taxes for 48 YEARS (since I was 15 years old. I am now 63).

3. My Social Security payments, and those of millions of other Americans, were safely tucked away in an interest bearing account for decades until you political pukes decided to raid the account and give OUR money to a bunch of zero losers in return for votes, thus bankrupting the system and turning Social Security into a Ponzi scheme that would make Bernie Madoff proud.

4. Recently, just like Lucy & Charlie Brown, you and “your ilk” pulled the proverbial football away from millions of American seniors nearing retirement and moved the goalposts for full retirement from age 65 to age, 67. NOW, you and your “shill commission” are proposing to move the goalposts YET AGAIN.

5. I, and millions of other Americans, have been paying into Medicare from Day One, and now “you morons” propose to change the rules of the game. Why? Because “you idiots” mismanaged other parts of the economy to such an extent that you need to steal our money from Medicare to pay the bills.

6. I, and millions of other Americans, have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you “incompetent b*******s” spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the American taxpayers and say you need more to pay off YOUR debt. To add insult to injury, you label us “greedy” for calling “bulls***t” to your incompetence. Well, Captain Bulls***t, I have a few questions for YOU:

1. How much money have you earned from the American taxpayers during your pathetic 50-year political career?

2. At what age did you retire from your pathetic political career, and how much are you receiving in annual retirement benefits from the American taxpayers?

3. How much do you pay for YOUR government provided health insurance?

4. What cuts in YOUR retirement and healthcare benefits are you proposing in your disgusting deficit reduction proposal, or as usual, have you exempted yourself and your political cronies?
It is you, Captain Bulls***t, and your political co-conspirators called Congress who are the “greedy” ones. It is you and your fellow nutcase thieves who have bankrupted America and stolen the American dream from millions of loyal, patriotic taxpayers.
And for what? Votes and your job and retirement security at our expense, you lunk-headed, leech.

That’s right, sir. You and yours have bankrupted America for the sole purpose of advancing your pathetic, political careers. You know it, we know it, and you know that we know it.

And you can take that to the bank, you miserable son of a b****h. NO, I did not stutter.

EVERYONE!!!

If you like the way things are in America delete this.

If you agree with what a Montana citizen, Patty Myers, says, please PASS IT ON!!!!

P.S. And stop calling Social Security benefits “entitlements”. WHAT AN INSULT!!!!

I have been paying in to the SS system for 45 years “It’s my money” – give it back to me the way the system was designed and stop patting yourself on the back like you are being generous by doling out these monthly checks!”

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Hollywood Gets Rewarded For Its Support Of President Obama

Money talks. I hate to be cynical, but money talks. Breitbart.com reported yesterday that the production tax incentives favorable to the domestic entertainment industry enacted by Congress in 2004, extended in 2008 and scheduled to expire in 2011, have been extended through 2013. The bill passed to avoid the fiscal cliff increases taxes on 77 percent of Americans, but Hollywood gets a tax break.

The article reports:

The original tax incentive applied to productions costing less than $15 million to make ($20 million in low-income areas). The 2008 extension applies to all films, up to a deduction of $15 million (or $20 million in low-income areas). The incentive is especially generous to television series; it applies to each TV episode.

Hollywood players routinely beg the government to raise their taxes so they can pay their “fair share.” 

Yet the industry moves new productions to places where existing tax breaks help its bottom line. That means plenty of shows and films are shot in states like New Mexico, which feature highly favorable tax rates, as well as destinations north of the border with similar perks.

It really is time to find some honest legislators to redo the tax code. I believe that there are a few men of principle in our government; unfortunately there are too few of them to accomplish what needs to be done.

Why Repealing ObamaCare Is Still A Good Idea

As we approach the fiscal cliff and some of us realize that no matter what happens taxes on all Americans will be going up, we are forgetting what Obamacare is going to do to our taxes. Before I go into the details, I would like to remind everyone that the Medieval surfs only paid 10 percent of their crops to the lord of the manor. They were allowed to keep more of the fruit of their labor than Americans are currently keeping.

The Daily Caller posted an article yesterday listing some of the new taxes that will be imposed by Obamacare. The new ‘taxes on the rich’ are expected to average approximately $700 billion over 10 years.

The article lists some of these new taxes. Here are a few:

Upper-income households. Starting Jan. 1, individuals making more than $200,000 per year, and couples making more than $250,000 will face a 0.9 percent Medicare tax increase on wages above those threshold amounts. They’ll also face an additional 3.8 percent tax on investment income. Together these are the biggest tax increase in the health care law.

Employer penalties. Starting in 2014, companies with 50 or more employees that do not offer coverage will face penalties if at least one of their employees receives government-subsidized coverage. The penalty is $2,000 per employee, but a company’s first 30 workers don’t count toward the total.

Health care industries. Insurers, drug companies and medical device manufacturers face new fees and taxes. Companies that make medical equipment sold chiefly through doctors and hospitals, such as pacemakers, artificial hips and coronary stents, will pay a 2.3 percent excise tax on their sales, expected to total $1.7 billion in its first year, 2013. They’re trying to get it repealed.

The insurance industry faces an annual fee that starts at $8 billion in its first year, 2014.

The article also lists pharmaceutical companies, which are already paying fees; people who don’t have insurance, who will be fined; and people who use tanning salons. It is no wonder that the only gains in employment that have resulted from Obamacare are in the Internal Revenue Service.

The prospect of a fiscal cliff is looming right now. The prospect of a serious recession brought on by the taxes of Obamacare is also looming, but has somehow been lost in the shuffle. If America is to survive economically, we need a Congress who will deal with both in a way that is good for the country–not simply good for their re-election campaigns.

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