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)
————————————

“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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The Problem With Arithmetic

The problem with arithmetic is that if you always use the same numbers you always get the same answers. You can’t change the answer (solution) without changing the numbers. It’s just too rigid! Unfortunately, America is about to fall victim to the rigidness of arithmetic. It won’t be obvious until after it happens, but it is coming.

John Hinderaker at Power Line posted an article yesterday about the arithmetic involved in solving America’s financial problems. He points out that what is happening in America is also happening around the world.

The article states:

American voters accepted Obama’s claim that no change is necessary, that $16 trillion of debt is nothing to worry about. In France, voters put socialists into office, vowing not to give an inch on government benefits, ever. In Spain, Greece, and elsewhere around the world, politicians promise their constituents that nothing has to change, more money can be found somewhere. They are all lying.

The article cites an article by Janet Daley that appeared in the U.K. Telegraph on Saturday. The opening paragraph of the article asks:

Was 2012 the year when the democratic world lost its grip on reality? Must we assume now that no party that speaks the truth about the economic future has a chance of winning power in a national election? With the results of presidential contests in the United States and France as evidence, this would seem to be the only possible conclusion. Any political leader prepared to deceive the electorate into believing that government spending, and the vast system of services that it provides, can go on as before – or that they will be able to resume as soon as this momentary emergency is over – was propelled into office virtually by acclamation.

After France raised the taxes on millionaires, the millionaires began leaving the country. As California continues to raise its taxes on ‘the rich,’ the exodus of the wealthy from that state continues. After Maryland raised taxes on millionaires, the number of millionaires in the state declined, and state tax revenue declined. There is a lesson here, and America needs to learn it.

The article in the Telegraph points out:

Barack Obama knows that a tax rise of those proportions in the US would be politically suicidal, so he proposes a much more modest increase – an income tax rate of around 40 per cent on the highest earners sounds very modest indeed to British ears. But that is precisely the problem. If a tax rise is modest enough to be politically acceptable to much of the electorate, it will not produce anything like enough to finance the universal American entitlement programmes, social security and Medicare, into a future with an ageing population. There is no way that “taxing the rich” – that irresistibly glib Left-wing solution to everything – can make present and projected levels of government spending affordable. That is why Britain and almost all the countries of the EU have redefined the word “rich” to mean those who are earning scarcely twice the average wage, and pulled more and more middle-income people into high tax bands. Not only are there vastly more of them but they are far more likely to stand still and be fleeced, because they do not have the mobility of the truly rich.

As the debate on the fiscal cliff continues, we need to keep our perspective on exactly what is going on.

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Does This Make Sense ?

A website called 24/7 Wall St posted an article yesterday stating that hourly workers for General Motors will receive bonuses this year of between $5,500 and $7,000 each.

The article reports:

The payments are based on a formula that gives workers a $1 bonus for every $1 million in North American operating profit at the two companies.

On Wednesday (as reported at rightwinggranny.com) the Detroit News reported:

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

It just seems odd to me that the taxpayers are out $13 billion and the workers are getting bonuses of up to $7,000. Why isn’t some of the bonus money being used to pay back the taxpayers for what they were forced to invest?

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Twisting The Numbers To Change The Story

Yesterday the Daily Caller posted a story about Bloomberg News and its reporting of a poll it conducted last week. The poll was taken by an Iowa-based firm and asked Americans how they felt about the coming ‘fiscal cliff.’

The article states:

A poll conducted last week by an Iowa-based firm showed Americans are conflicted about whether or not to support raising tax rates on wealthy Americans to avert the so-called “fiscal cliff.” But that’s not how Bloomberg News, which commissioned the poll, reported the results Thursday.

Somehow, when the story was reported, the headline read, “Americans Back Obama Tax-Rate Boost Tied to Entitlements.” So what did the poll actually show? The article reported that fifty-eight percent of the people polled thought President Obama was right to insist on raising taxes on the wealthy as a precondition for talks about the fiscal cliff. However, when you take a closer look at the numbers, you find that fifty-two percent responded that they preferred limited tax breaks to a tax-rate hike. Thirty nine percent said that they wanted to see tax rates on the wealthy increase, and nine percent said they were not sure.

Please follow the link above to read the entire story. There is also an attempt in the story to convince the reader that raising taxes to increase government spending is a solution to our current economic problems.

Bloomberg news is a respected financial news source. They do a disservice to themselves and the American people when they do not accurately report the news..

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A Chart That Tells It All

From the Weekly Standard today:

The Senate Budget Committee has stated that $1.2 trillion of the proposed $1.6 trillion in tax hikes would go toward new spending, while only $400 billion would go toward deficit reduction. We don’t need more taxes or more spending–we need to cut both taxes and spending.

President Obama has stated that ‘taxing the rich’ will solve our budget problems. Taxing the rich in order to spend more money will simply create more budget problems. Until we deal with the spending, there will be no solution.

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Playing Numbers To Keep Americans In The Dark

Breitbart.com reported yesterday that there is a plan being considered by the Obama Administration to keep American workers in the dark about the consequences of going over the ‘fiscal cliff.’ According to the article, the idea is that Treasury Secretary Tim Geithner will simply adjust the tax withholding tables so that Americans do not see the results of going over the cliff in their paychecks. Politically this might work for a short time, but practically, it could easily be a disaster.

The article reports:

This idea is being floated now. Bill Hoagland, senior vice president at the Bipartisan Policy Center, explained, “If we were to, say, go over the cliff and the rates go up, he could modify those withholding tables such that the average employee out there would not effectively see any more or less taken out of his paycheck.”

As Treasury Secretary, Geithner is responsible for setting withholding tables “most appropriate” in implementing tax law. Joseph Minarek, senior vice president and director of research at the Committee for Economic Development, said that Obama could use Geithner’s power as leverage in forcing Republicans to come to a deal on the fiscal cliff.

The article also points out that this strategy could result in a lot of angry taxpayers next April when they realize that they have to write checks to the IRS.

The article concludes:

But the Obama Administration knows that if the fiscal cliff is hit, other taxes, such as the alternative minimum tax, the estate tax and taxes on capital gains and dividends will rise precipitously, so they are considering the withholding plan as a way to fool the middle-class long enough so they forget who was responsible for raising their taxes.

It’s not about who is responsible for what–it is about what is best for America. It would be nice if more people in Washington understood that.

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Was Obamacare About Healthcare Or Taxes ?

Reuters reported on Monday that the Internal Revenue Service has released new rules concerning dividends and capital gains as part of the 2010 healthcare law. The obvious questions here is, “What do dividends and capital gains have to do with healthcare?” Evidently more than we knew.

The article reports:

The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.

The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.

The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.

Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.

Please keep in mind that the AMT (Alternative Minimum Tax) was originally enacted to impact only the wealthy. As of 2011, a single person who made $48,450 was impacted by that tax. I really don’t consider $48,450 wealthy. How long will it be before the new healthcare taxes begin to impact the middle class?

The article further points out:

The IRS plans to release a new form for taxpayers to fill out for this tax when filing 2013 returns.

Oh joy.

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The Charts Tell The Story

Steven Hayward posted a story at Power Line including the following charts:

The article points out:

Second, raising rates on the rich has always been a liberal cover for raising taxes on everyone.  Obama doesn’t seem to know much about economics, but he certainly knows that taxing the rich alone won’t begin to resolve the deficit.  The real money has always been found in taxing the middle class.  The great jump in federal revenues began in World War II when the income tax was changed to reach much further down the income ladder of the middle class.  (See Figure 4.)  This is why I think Obama actually wants to go over the fiscal cliff, slam the middle class, and blame it on Republicans.

Hang on to your hats. We are going to get what we voted for!

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Amazing Logic

On Friday The Christian Science Monitor posted an article explaining why President Obama’s economic proposal contained a large amount of stimulus spending.

The article reports:

The argument in favor of such stimulus? The tax measures, at least, could minimize the drag on the economy from Mr. Obama’s proposed tax increases on the wealthy.

This is an amazing statement. Why increase taxes on the wealthy if you know that it will slow down an already struggling economy? How is going deeper into debt going to solve the deficit problem? The logic behind this policy amazes me.

The story goes on to outline the rest of President Obama’s proposal. After reading the details, my question is, “What part of out of money don’t you understand?” I hope there is a grownup somewhere in Washington who will make the case for cutting spending and be willing to stand his ground.

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Why Taxing The Rich At Even A Hundred Percent Doesn’t Increase Revenue

Yesterday’s Wall Street Journal reported that Jim Sinegal, head of CostCo and one of President Obama’s strongest supporters during the 2012 election, has taken steps to avoid the coming taxes that will impact the ‘rich.’

The article reports:

Specifically, the giant retailer announced Wednesday that the company will pay a special dividend of $7 a share this month. That’s a $3 billion Christmas gift for shareholders that will let them be taxed at the current dividend rate of 15%, rather than next year’s rate of up to 43.4%—an increase to 39.6% as the Bush-era rates expire plus another 3.8% from the new ObamaCare surcharge.

More striking is that Costco also announced that it will borrow $3.5 billion to finance the special payout. Dividends are typically paid out of earnings, either current or accumulated. But so eager are the Costco executives to get out ahead of the tax man that they’re taking on debt to do so.

Like it or not, this is a sound business decision. It is also representative of what companies around the country are doing as this year comes to a close.

The article concludes:

As it happens, one of those new stores opened Thursday in Washington, D.C., and no less a political star than Joe Biden stopped by to join Mr. Sinegal and pose for photos as he did some Christmas shopping. It’s nice to have friends in high places. We don’t know if Mr. Biden is a Costco shareholder, but if he wants to get in on the special dividend there’s still time before his confiscatory tax policy hits. The dividend is payable on December 18 to holders of record on December 10.

To sum up: Here we have people at the very top of the top 1% who preach about tax fairness voting to write themselves a huge dividend check to avoid the Obama tax increase they claim it is a public service to impose on middle-class Americans who work for 30 years and finally make $250,000 for a brief window in time.

If they had any shame, they’d send their entire windfall to the Treasury.

It will be the middle class that pays for President Obama’s taxes on the ‘rich.’ The rich have the accountants to avoid those taxes.

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Voting With Your Feet

CBN News is reporting today that when the British government changed the tax rate on millionaires to 50 percent, wealth left the country. Wow! What a surprise.

The article reports:

The London Telegraph reports that 16,000 British citizens declared an annual income of more than a million pounds in the 2009-2010 tax year.

That number fell to just 6,000 after the government introduced the new top tax rate of 50 percent.

Analysts believe many Brits simply moved out of the country to avoid the high taxes. Others found ways to cut their taxable income.

The article further reports:

Chancellor of the Exchequer George Osborne, a member of the new Conservative Party majority, announced the top tax rate will be reduced to 45 percent next year for those with annual incomes of 150,000 pounds.

Since that announcement, the number of people making a million pounds a year has gone back up.

Tax revenue in the United States generally averages between 18 and 20 percent of the Gross Domestic Product. When you increase the taxes on the rich, tax revenue in the United States generally averages between 18 and 20 percent of the Gross Domestic Product. There is a lesson here. Attempting to ‘punish’ the rich for their success does not work. Aside from the fact that envy is not a particularly desirable trait in anyone, it does not make good economic policy. Our budget problems in America are not the result of low revenue–they are the result of high spending. Traditionally government spending has averaged between 18 and 20 percent of the Gross Domestic Product. Under President Obama it has averaged closer to 25 percent. That has created a problem. The solution to the problem is less spending–not more taxes.

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Rhetoric Vs. Facts

We’re hearing a lot lately about solving our nation’s fiscal problems by ‘taxing the rich.’ It sounds good, but the facts just don’t agree with the talking points.

Breitbart.com posted an article yesterday that crunched some of the numbers involved.

Breitbart.com reported:

“The president’s plan to increase taxes on the upper two percent covers the spending by this federal government not for eight years, not for eight months, not for eight weeks but for eight days. Eight days only,” said Mr. Price (Rep. Tom Price (R-GA)). “It’s not a real solution. So, again, I’m puzzled by an administration that seems to be more interested in raising tax rates than in gaining economic vitality.”

So what is going on?

The article cites a comment by Warren Buffett that may explain things:

Indeed, even Mr. Buffett seems to concede that he and the president’s “soak the rich” proposals are more an act of political theater designed to generate an emotional response than serious solutions: Mr. Buffett told Matt Lauer he believes his proposal would boost the “morale of the middle class.” 

This is not about fiscal responsibility. This is called class warfare, and unfortunately, a lot of Americans have bought into the idea that punishing success is better than formulating policies that will help more people achieve success.

There is one important thing to remember as we approach the fiscal cliff. The Republicans control only one-half of one branch of government. Whatever happens, if it is not successful, the media will blame the Republicans. The Republicans might as well stick to their guns about not raising taxes and at least get blamed for something they did right. The idea of raising taxes now and dealing with spending cuts later is laughable. The Democrats have made that promise before, and the spending cuts never happened.

The problem is on both sides of the aisle–bigger government means more power concentrated in Washington. Congressmen like power. Until we elect people who put the welfare of the country before their own personal ambitions, nothing will change.

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This Is Not Going To Win Any Friends, But It’s A Great Idea

Like the rest of the country, Massachusetts is looking at tax increases in the coming year. Today’s Attleboro Sun Chronicle reported a suggestion from Representative Dan Winslow.

I am not sure how serious a suggestion this is, but I love it. The Sun Chronicle reports:

Winslow says the solution to the tax talk is simple — make politicians dig into their own pockets first.

 Winslow, R-Norfolk, is proposing a 25 percent tax on leftover campaign money at the end of each election cycle be poured into state coffers.

“There is more than 20 million dollars sitting in war chests after campaign season,” he said. “Why not tap into that?”

Winslow said that if politicians were taxed on their campaign treasuries, $5 million would be subtracted from the additional amount individual taxpayers might be hit with.

“On Beacon Hill, there has been talk from the Democrats that there will be an increase in retail revenue and that we will be charged a penny for mileage along the Mass state highway,” he said.

The reason for potential tax increases is desperation and poor leadership, Winslow said.

What a great idea–tax the politicians first!

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It Is Possible To Balance The Budget Without Raising Taxes

On Saturday the Washington Examiner posted an editorial about balancing the American budget. The editorial reminds us that everyone–rich or poor–will pay more in taxes after January 1.

The editorial states:

Liberal columnists love to point out that the top marginal rate on personal income was 91 percent in the 1950s and in the early 1960s. But the tax code back then was also chock-full of loopholes and benefits that let top earners escape such stifling tax burdens. As high as top marginal rates were, taxes as a percentage of GDP never rose above 19 percent, and in fact fell as low as 14.5 percent.

In fact, since World War II, federal taxes as a percentage of GDP have never risen above 20.6 percent and have averaged just under 18 percent. This has been consistent, regardless of changes to tax rates.

This fact is also confirmed in the Laffer Curve. There is a point at which tax increases actually result in less revenue. We need to keep this fact in mind as we discuss what to do about the ‘fiscal cliff.’

There are two think tanks that represent the two ways of thinking about solutions to the ‘fiscal cliff’:

Obama’s favorite think tank, the Center for American Progress, submitted a plan that calls for the federal government to eat up more than 20 percent of the American economy through taxation every year, in perpetuity. Being the liberals that they are, CAP calls for even higher levels of spending — above 22 percent of GDP by 2022 alone.

Contrast CAP’s plan with that of the Heritage Foundation. It returns taxation to just above the historical U.S. average at 18.5 percent of GDP. By cutting spending to pre-Great Society levels, the Heritage plan not only balances the budget but actually begins to lower our cumulative national debt.

Taking money from people who earn it and giving it to people who don’t earn it is not a solution to anything. Until Washington stops using American taxpayers as vehicles to get re-elected, nothing will be accomplished.

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Exactly What Is Fair ?

On Thursday the Washington Examiner posted an editorial with the title, “If top 5% paid 40% of taxes, what is their ‘fair’ share?”. That is a very reasonable question.

The current Democrat talking points are stated in the editorial:

Obama said in his postelection news conference earlier this month, “want to make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges. They expect that folks at the top are doing their fair share as well.” House Minority Leader Nancy Pelosi, D-Calif., echoed this point in a fundraising pitch sent out on Monday: “Voters sent a clear message to Republicans in the election: we must stand up for the middle class and ensure the wealthy pay their fair share.”

What does the amount of taxes the wealthy pay have to do with standing up for the middle class?

The editorial reminds us:

As matters stand, the top 1 percent of American households paid 39 percent of income taxes in 2009, according to the most recent data compiled by the Congressional Budget Office, and the top 5 percent of taxpayers paid 64 percent.

But income taxes, taken in isolation, do not tell the whole story, because lower-income Americans do pay payroll taxes. But even taking into account all forms of taxation, the top 1 percent still paid 22 percent of federal taxes while earning just 13.4 percent of household income. The top 5 percent paid 40 percent of all federal taxes, despite earning only 26 percent of all income. No matter how you slice the numbers, it’s hard to understand why anyone would think the wealthy aren’t already shouldering a burden commensurate with their blessings.

It seems to me as if the wealthy are already paying more than their fair share. And if raising taxes on anyone is going to slow down an already struggling economy, why in the world would you want to raise taxes on anyone?

In March of this year I posted the following (rightwinggranny.com):

Fox News has a video posted showing President Obama stating in April of 2008 that, despite evidence it doesn’t increase revenue, he’d raise the capital gains tax on America’s richest Americans. Then-candidate Obama used one of his favorite words by saying it would be the “fair” thing to do! So it’s not really about revenue–it’s about redistributing wealth–taking money away from people who have earned it and giving it to people who have not earned it. How does that make our society better?

The purpose of being President (or House Minority Leader) is not to carry out your own personal vendetta upon those you resent because they are successful. It’s time to grow up and get past the idea that it is up to you as President or Congressmen to punish those who are successful.

We will all be seeing tax increases in January due to Obamacare. The question is how much additional taxation will we stand for. I personally feel taxed enough already–I think it’s time for the Tea Party to get back to their roots and begin to make noise again.

 

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Some Truth From One Of My Favorite Liberals

Susan Estrich is one of my favorite liberals. Although I probably disagree with her on most things, there are times when she hits the nail on the head squarely. Her recent article at Creators.com was one of those times.

The article was entitled, “The Mandate To Raise Taxes on the “Rich.””

She reports:

Within days of winning the election, President Obama announced that his victory gave him a mandate to raise taxes on the “rich.”

Come again? This was a two-and-a-half-point election. It reflected a painfully divided electorate. The only mandate I saw was to unite a divided country.

Ms. Estrich explains that she voted for Obama and lists many of the reasons for her vote. She clearly states that she does not think she is paying too little in taxes in spite of the fact that she falls into the group of people President Obama describes as “rich.”

She points out:

I am all for closing loopholes. I am all for ending deductions for things I don’t even understand. But I am not for putting a low cap on deductions that would make it all but impossible for the charities I support to raise funds. I am not for putting a limit on the mortgage deduction that would mean, as a practical matter, that “middle class” (not rich) people in California would be priced out of the housing market, and the charities I support would not be able to raise what they need to survive.

That makes total sense. Ms. Estrich, would you please run for office.

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As You Hear The Debate On Raising Taxes…

As we approach the fiscal cliff put into place by Congress and the President, we will hear a lot about the need to increase taxes to balance the budget. We will also hear that the ‘rich’ are not paying their fair share.

First of all, this is how the tax code currently works (2009 numbers) according to the National Taxpayers Union:

Who Pays Income Taxes and How Much?

Tax Year 2009 

Percentiles Ranked by AGI

AGI Threshold on Percentiles

Percentage of Federal Personal Income Tax Paid

Top 1%

$343,927

36.73

Top 5%

$154,643

58.66

Top 10%

$112,124

70.47

Top 25%

$66,193

87.30

Top 50%

$32,396

97.75

Bottom 50%

<$32,396

2.25

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

Secondly, watch the first minute of this video taken from the 2008 Democrat Presidential Primary debate:

Ask yourself, “What is this debate really about, and why is President Obama so determined to ‘tax the rich’ when it has been proven that doing so will not increase revenue to reduce the deficit?”

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What In The World Are We Thinking ?

Bill Clinton’s relationship with the truth has not changed since the 1990’s. Breitbart.com posted a video of Bill Clinton on CNN yesterday explaining that the American people are easily confused by plans of lower taxes and lower spending. In the video he cited a few facts that were simply not true. See the numbers below taken from the National Taxpayers Union to see who actually pays income taxes in America.

Who Pays Income Taxes and How Much? 

                                Tax Year 2009

 
Percentiles Ranked by AGI AGI Threshold on Percentiles Percentage of Federal Personal Income Tax Paid
Top 1% $343,927 36.73
Top 5% $154,643 58.66
Top 10% $112,124 70.47
Top 25% $66,193 87.3
Top 50% $32,396 97.75
Bottom 50% <$32,396 2.25
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

Lower taxes and smaller government allow the private sector to grow. There is nothing confusing about that, and the American people are not confused. We are reaching the point where more people are taking money out of government that are putting money in. At that point the system totally breaks down and America as we have known it disappears. This election may be our last chance to prevent that.

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An Interesting Tax Plan

One of my favorite Congressmen is Representative John Campbell, a Republican from California.

Representative Campbell states on his website:

Many of you know that I am the only member of Congress with a Master’s Degree in Business Taxation (MBT). I received that degree from USC (Fight on!) in 1977. I am a CPA and once prepared tax returns for a living. At that time, I learned the Internal Revenue Code of 1954. We now have the Internal Revenue Code of 1986. I believe we may soon see the Internal Revenue Code of 2013.

But, what will that code look like? We ought to “reach for the stars” here. Let’s not just tinker with the tax code and change it a little bit. Let’s see if we can get 218 votes in the House, 60 votes in the Senate and the signature of whoever is president on a complete restructuring of the Code that would make it flatter and simpler.

This is the link to Representative Campbell’s tax proposal. After reading the proposal, there is a link to another site where you can take an opinion poll expressing your ideas on the proposal.

Here are some of the highlights of Representative Campbell’s proposal:

Eliminate all deductions except: charitable contributions, home mortgage interest and non-elective medical expenses.

Go to 2 tax rates: one for incomes below $100,000 (maybe 20% under this scenario) and a second for incomes above that (something like 28%).

Allow corporations to deduct dividends from their income, but make dividend income taxable as ordinary income with no preferences to individuals.

Eliminate any preferences for capital gains, except for non-depreciable assets held over 5 years.

Implement a minimum tax so that anyone with any income at all pays 2% of their gross income or a minimum of $100.

Please follow the link to read the details of the proposal and record your ideas.

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This Sounds Like A Lose Lose Situation

CNS News is reporting today that the Congressional Budget Office (CBO) is predicting that if tax rates rise in 2013, the economy will slip back into recession. Unless Congress acts, there will be a significant tax increase on January 2013.

The article points out that Congress will not act to change the projected increase in taxes until after the election. Great. Translated loosely, that means that Congress does not want to take responsibility for any actions they might take regarding taxes. As you know, President Obama is already saying that he won’t do anything to stop the drastic defense cuts included in sequestration unless the Republicans agree to raise taxes. Does anyone honestly believe that additional tax revenue will be used to pay down the deficit? In the past, when taxes have been raised, has spending ever actually remained the same or been cut?

The article concludes:

While CBO included mandatory spending cuts from the federal budget sequester (the “fiscal cliff”) in its analysis, the vast majority of the impact to the economy will come from the tax increases – the expiration of the Bush tax cuts — due to their sheer size.

CBO estimated that the combination of spending cuts and tax increases would reduce the federal deficit by $487 billion in fiscal 2013, with the vast majority of that figure coming from tax increases.

CBO projects that if current tax policies are kept in place and do not expire in 2013 as scheduled, revenues would be $5 trillion less between 2012 and 2022.

Congress is not expected to address either the mandatory spending cuts or the expiration of the Bush tax rates until after the election.

We need to examine the way that we look at taxes, tax rates, etc. The American public has been fed a line that somehow the government has a legitimate right to the earnings of the American people. It does not. There is nothing greedy about wanting to keep money that you have worked hard to earn. There is something basically wrong about taking money from people who have worked hard to earn it and giving it to people who have chosen not to work. I am sure we have all heard stories about people who refused to take low paying jobs because they could make more money simply by being on welfare and they didn’t have to go to work all day. Because of the amount of taxes taken out of all of our paychecks, the line between making money at the bottom of the economic spectrum and collecting welfare has become very blurred.

It’s time to remember that money belongs to the people who have earned it–no one else is entitled to it–not even the government. Unless we elect an administration that understands that people are entitled to the rewards of their hard work (they did build that!), we are going to wind up in the same place as the bankrupt countries of Europe.

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