Tag Archives: taxes

Voting With Their Feet

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Yesterday The New York Post posted an article about what is happening to the cost of living in New York City.

The article reports:

More than a third of all city residents say they can’t afford to live anywhere in the state — much less the Big Apple — and believe economic hardship will send them packing in five years or less, according to a dismal new poll.

That’s 41 percent of city dwellers who say they can’t cope with New York’s high cost of living, according to a Quinnipiac poll published Wednesday.

Separately, 41 percent fear they’ll be “forced” to pull up stakes and seek greener pastures where the economic climate is more welcoming.

“They are making this city a city for the wealthy, and they are really choking out the middle class,’’ said Ari Buitron, a 49-year-old paralegal and born-and-bred New Yorker from Forest Hills, Queens.

The cost of taxes and housing have driven many residents south:

Even well-heeled New Yorkers are being lured down south thanks to New York’s hefty tax burden and new federal tax policies that punish high-tax states, according to Miami property magnate Gil Dezer.

“Because of the city tax and the non-deductibility of your real estate taxes, we’re seeing a lot more people with piqued interest,” he told The Post.

The poll’s findings reinforce research done by the Empire Center for Public Policy that shows that New York leads the nation in terms of residents jumping ship.

“It’s not surprising. The out migration downstate is first and foremost about affordability. Rent and property taxes downstate are very high,” said the Empire Center’s E.J. McMahon.

Right now, a very large percentage of Americans live in New York City and Los Angeles. If the electoral college were eliminated, these cities would essentially elect our President. However, if these cities continue to lose population, eliminating the electoral college, despite the fact that it would be a foolish move, might not have the effect those calling for its elimination desire.

Comparing Apples To Apples

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Most of us understand that the media is biased and slants its articles accordingly. The challenge for voters is to look past the obvious to make sure what they are reading is actually true. One recent example of misrepresenting a basic fact is the way the Trump tax cuts are being reported.

On February 13th The Daily Signal posted an article illustrating the fake news regarding the tax cuts.

The article includes the following tweet:

The article explains the problem with her statement:

This is simply the latest episode in a long-running campaign to demagogue tax cuts that let the vast majority of Americans keep more of their hard-earned money.

Some of the biggest cuts are actually being enjoyed by the lowest-income Americans. A typical family of four got a $2,917 tax cut this year.

…So what’s the complaint about?

In an early sample of tax returns, the IRS has reported that average refunds are down $170 from last year and that they hadn’t changed much from 2017, the year before.

But this is not relevant, for two reasons.

First, the sample of tax returns cited by the IRS is very small, and some analysts expect refunds will actually go up this year.

But second, and more importantly, tax refunds have nothing to do with the size of anyone’s tax cut. A refund is what you get back if you’ve paid too much in taxes throughout the year. Your tax cut is the drop in total taxes you owed to Uncle Sam last year. The two are not connected.

Employers across the country already gave us our tax cuts by withholding less money from our paychecks every pay period. Americans saw a bump to their paychecks in February 2018.

Of course, withholding is never perfectly accurate, so your refund or tax payment at the end of the year is simply a last-minute adjustment. But that refund does not cancel out the overall bump in take-home pay due to the tax cut.

Do you remember when House Speaker Nancy Pelosi called the tax cuts “monumental, brazen theft,” or when former Treasury Secretary Larry Summers predicted the tax cuts would kill 10,000 people every year? This most recent round of hysteria is just more of the same.

Be prepared for more false stories as the 2020 election grows closer.

Crony Capitalism Stopped In New York City

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Heritage.org posted an article today about Amazon’s decision not to locate in New York City.

The article reports:

Based on Amazon’s public statement, it seems the company couldn’t rely on the deals it had cut or the political support it had received to last beyond the next election. And businesses can’t base long-term decisions like this on shifting political sand.

That’s part of the problem with crony capitalism. It may procure short-term wins for a select few politicians and for businesses that can afford to pay to play, but it’s not a strategy for long-term success.

Employers want to set up shop in places where they can grow and succeed. The best environment for that is a level playing field with minimal government interference and low, broad-based taxes—not picking winners and losers through special-interest subsidies. 

A favorable business environment is one where local leaders work to help all businesses equally, not a select few. Employers want leaders who can listen to their needs without telling them how to run their business, and they want communities and leaders that welcome the jobs and economic growth that employers bring, instead of protesting their presence. 

It turns out this is not what New York City had to offer. Amazon said that certain politicians “made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward.”

New York City is not a friendly business climate, and losing those special “relationships” would have left it exposed to the same burdens and barriers that other businesses face in New York. 

For most businesses, deciding where to locate really all comes down to the bottom line.

The article notes that businesses and people are leaving New York:

According to the ALEC-Laffer State Economic Competitiveness Index, “Rich States, Poor States,” New York ranks dead last in the overall economic outlook ranking, while Virginia ranks among the top 10. 

And Amazon isn’t the only company wary of locating in New York. Plenty of individuals, families, and businesses are fleeing the state, and they’re taking their income and tax revenues with them. 

In fact, between 1997 and 2016, every dollar of income that left New York was replaced by only 71 cents coming in. That deficit will only continue under New York’s current policies.

The article concludes:

States and cities should also take a lesson from this New York episode: Crony capitalism isn’t the way to win over more business. The key is to provide a level playing field that offers opportunity for all businesses to grow and thrive.

Most People Got Bigger Tax Refunds This Year Than Last Year

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Yesterday Hot Air posted an article about this year’s tax refunds. The article was in response to a Washington Post article claiming that people were getting lower tax refunds this year than last year.

The article at Hot Air pointed out a number of things that might result in getting a smaller tax refund:

But since we have to play this game, let’s figure out why your refund is smaller. Did you get a raise or a significant bonus last year? Did you perhaps start a new job that pays more? Were there any other major changes in your financial situation? Tax filing company Intuit has a list of possible explanations you could look for. They include things such as your filing status changing, the selling of assets or the possibility that you were hit with a penalty.

There will be a small number of people who lost out on part of their SALT (state and local tax) deductions, but that should really only have a significant impact on people in high-tax states like New York who are earning well into six figures. As for everyone else, if your income went up, did you adjust your withholdings accordingly? If not, perhaps you need to have a chat with an accountant.

The article also reminds us that a tax refund is a refund of the money that you gave to the government during the year. You allowed them to have that money interest free until you filed your tax return and they were obligated to give the money back to you. Ideally, your tax refund should be small–that means that you correctly calculated the amount of money you actually owed the government. The question is not how big your tax refund is–the question is how much money you actually paid in taxes. The size of your tax refund is simply a reflection of how much money the government took from you during the year.

The Need For A Reality Check

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Green energy is a wonderful concept. Energy in Iceland is almost entirely green because the country sits on a number of volcanoes that supply it with thermal energy. I’m not sure that I am willing to live on a volcano to get thermal energy, but that is one way to go green. However, the quest for green energy where there is not such an obvious energy source has not been particularly successful.

CNS News posted an article yesterday about the statement put out by Speaker Pelosi to recognize Black History Month.

The article has the entire statement, but I think the focus is interesting:

Democrats will be pushing a “For the People” agenda that will include raising wages by building green infrastructure.

“And we are pushing forward a bold, ambitious agenda For The People to make good on the promise of the American Dream for everyone by lowering the cost of health care and prescription drugs, raising wages by rebuilding America with green, modern infrastructure, and strengthening our democracy by ensuring that our government works for the public interest, not the special interests,” Pelosi said.

Let’s talk about rebuilding America with green, modern infrastructure. Green energy is one of the major special interest groups in America.

In 2015, The Washington Times reported:

Taxpayers are on the hook for more than $2.2 billion in expected costs from the federal government’s energy loan guarantee programs, according to a new audit Monday that suggests the controversial projects may not pay for themselves, as officials had promised.

Nearly $1 billion in loans have already defaulted under the Energy Department program, which included the infamous Solyndra stimulus project and dozens of other green technology programs the Obama administration has approved, totaling nearly about $30 billion in taxpayer backing, the Government Accountability Office reported in its audit.

The hefty $2.2 billion price tag is actually an improvement over initial estimates, which found the government was poised to face $4 billion in losses from the loan guarantees. But as the projects have come to fruition, they’ve performed better, leaving taxpayers with a shrinking — though still sizable — liability.

It’s a good thing Speaker Pelosi didn’t say anything about lowering taxes–maybe the increased wages with increased taxes will pay for the green energy.

This green energy idea has not been successful when tried before.

In August 2014 The Daily Caller posted an article about Spain’s attempt to convert to green energy:

According to a new report by the free-market Institute for Energy Research, Spain’s green energy policies have resulted in skyrocketing electricity prices, billions of euros in debt and rising carbon dioxide emissions.

“For years, President Obama has pointed to Europe’s energy policies as an example that the United States should follow,” said IER in a statement on their new study. “However, those policies have been disastrous for countries like Spain, where electricity prices have skyrocketed, unemployment is over 25 percent, and youth unemployment is over 50 percent.”

Spain began heavily subsidizing green energy sources, like wind and solar, in the early 2000s with its“Promotion Plan for Renewable Energies. The country used a combination of generous feed-in tariffs, green energy generation quotas and green power subsidies to boost renewable energy development in the country and lower its carbon dioxide emissions.

…But what seemed like a booming green energy economy on the surface was really becoming a costly way to help drive Spain into economic recession. By 2011, Spain’s electricity prices stood at 29.46 U.S. ¢/kilowatt-hour — two and a half times what electricity cost in the U.S. at the time.

President Trump has helped all Americans. We have the lowest unemployment among minorities that we have had in a very long time. Wages are going up, taxes are going down, and the workforce participation rate is climbing. I suggest that if Speaker Pelosi truly wants to help minorities during Black History Month she should support President Trump’s economic agenda.

Government Health Care Comes To New York City

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The Daily Wire is reporting today that New York City Mayor Bill De Blasio has announced that the city will begin a ‘universal’ health care program that will provide for health care for all uninsured New York City residents, “regardless of their ability to pay or their immigration status.”

The article reports:

ABC News reports that de Blasio’s new plan, NYC Care, isn’t exactly a “universal health care” plan, but rather a “guarantee” that the city will pay for preventative medical care for an estimated 600,000 who do not have insurance, but live within the boundaries of New York City.

Health care, De Blasio announced, is now a “right” for anyone who gets sick in NYC.

“We recognized that obviously health care is not just in theory a right,” de Blasio told media ahead of his announcement. “We have to make it in practice a right.”

“Health care is a human right. In this city we are going to make that a reality,” de Blasio repeated at a press conference on the expansion Tuesday morning.

The plan, which isn’t precisely a plan — details are scant on how the system will actually work — will cover everything from mental health services, to well visits, to maternity care for New Yorkers who choose to go without insurance, or who can’t afford even the basic, public insurance option that New York City already offers, and aren’t signed up for “Obamacare” options on the state exchange.

The article mentions Mayor De Blasio’s estimate of the cost:

As Daily Wire Editor-in-Chief Ben Shapiro pointed out on Twitter, de Blasio’s government estimates the plan will cost the city no more than $100 million per year — an amount that de Blasio says precludes having to raise taxes to cover the program. But the $100 million number assumes either that not all 600,000 uninsured individuals will need medical care, or that medical care will be provided at far below market value.

If anyone wants to start a pool on how long it is before New York City has to raise taxes to pay for this, I’m in. I wonder if this new service (and its cost) will speed up the exodus from New York.

Americans Often Vote With Their Feet

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Yesterday The New York Post posted an article about New York City’s shrinking middle class.

The article reports:

After decades of sharp income erosion in the face of relentless taxes, escalating living costs and wage reductions through technological changes, the full extent of this shocking exodus is laid bare in the latest US Census data.

That shows the city is losing 100 residents each day — with departures exceeding new arrivals.

“The rich in New York City are getting richer; the poor are actually getting richer, but not rich enough to be middle class,” said Peter C. Earle, an economist at the American Institute for Economic Research, who has studied other data, noting the expansion in welfare and entitlement programs.

Earle said it isn’t unreasonable to assume middle-class incomes are falling even faster in New York City than in other major US cities, because of the city’s high — and rising — housing and other living costs.

New York City’s middle class comprises 48 percent of city residents, with median annual incomes between $30,000 and $60,000.

Thirty-one percent make lower incomes, and the ranks of the rich account for 21 percent of New York City residents.

By contrast, in the early 1970s, about 61 percent of New Yorkers were ensconced in the middle class; today, fewer than half are.

Recently Amazon opened a facility in Long Island City that received an estimated $3 billion in subsidies, increasing the tax burden on city residents. Although increasing the number of jobs is a good idea, having the taxpayers pay for those jobs is not.

The article concludes:

National chain-store locations have plunged in the city by 0.3 percent, to 7,849, this year, according to the Center for an Urban Future. And a record 18 chains, including Aerosoles and Nine West, vacated all their city sites in 2018.

One sector doing a booming “business” is food pantries. Despite a city unemployment rate of 4 percent, New York food pantries report elevated levels of demand, especially during the holiday season.

More than 1 million New Yorkers now worry they won’t have enough food for their families, according to recent studies.

Unless something changes in the economic policies of New York City, the city will no longer be the center of commerce and art that it has been. The voters in New York City need to take a good look at where there city is going and make the appropriate political changes.

The Real Numbers

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Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

The Economy Under President Trump

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I am not an economist, but I have learned over the years to listen to the people with the best track records on analysis. One of those people is Stephen Moore, who posted an article at The Wall Street Journal yesterday.

The article reports:

Liberals are tripping over themselves to explain why the economy has performed so much better under Donald Trump than it did under Barack Obama. The economy has grown by nearly 4% over the past six months, and the final number for 2018 is expected to come in at between 3% and 3.5%. The U.S. growth rate has doubled since Mr. Obama’s last year in office.

When Mr. Trump was elected, many Democratic pundits predicted an economic and stock-market meltdown. Then the economy started surging and they abruptly changed their tune, arguing that Mr. Trump was simply riding a global growth wave. That narrative was shattered when U.S. growth kept steaming ahead even as global growth—especially in China and Germany—stalled.

The people who predicted an economic crash if President Trump was elected are now saying that the tax cuts have given us a ‘sugar high’, and the market will crash when the sugar wears off. That makes about as much sense as President Obama taking credit for the move toward American energy independence.

The article continues:

The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

The article concludes:

Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.

When you decrease taxes and regulations on businesses, we all gain. That combination, if allowed to continue, will bring us continued economic growth.

Mourning A Past President

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I am not former President Bush’s biggest fan, but the fact remains that he was a patriot who served his country in various ways. I am amazed at how the very members of the press who treated former President Bush very unfairly during the time he was President have now bestowed sainthood on him while using that sainthood to attack President Trump. I am totally convinced that in the eyes of the media, the only good Republican is a dead Republican.

A TMZ article posted at November 30 posted the following about President Bush’s accomplishments:

Along with being President, Bush also served as the 11th director of the CIA and 43rd Vice President of the U.S. under President Ronald Reagan. Bush was inaugurated as President on January 20, 1989.

Foreign policy — in particular the Gulf War, the fall of the Berlin Wall and the dissolving of the Soviet Union — was the centerpiece of Bush’s presidency. Among his other accomplishments — instituting a ban on importing semi-automatic rifles and signing the 1990 Americans with Disabilities Act and 1991 Civil Rights Act.

The article also notes:

Bush’s zinger during his election campaign, “Read my lips: no new taxes,” became an unforgettable moment … something he reneged on during his presidency.

Those new taxes were the result of a budget agreement brokered with the Democratic Congress. The agreement was supposed to help deal with the deficit. President Bush was praised for his courage in passing those taxes and was actually given the 2014 Profile in Courage Award by the John F. Kennedy Library Foundation for the tax increase. Yet that tax increase caused a recession even though the tax was only on ‘luxury items.’ No one in Congress stopped to consider that taxing those items would have a negative impact on the people who built them. George Bush lost the 1992 election because the Democrats blamed him for the recession that followed the tax increase. Somehow the Democrats avoided taking responsibility for their part in brokering the budget deal.

At any rate, may President Bush rest in peace.

 

What Is This Actually About?

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On Friday, Breitbart posted an article about the debate over one of the questions that is supposed to appear on the 2020 Census.

The article reports:

Republican lawmakers are working with Democrats to ban the 2020 Census from asking United States residents whether or not they are American citizens.

In March, President Donald Trump’s administration announced they would put the citizenship question back on the census. It has not been included since 1950. For seven decades, all residents living in the United States have been counted on the census but have not been asked whether or not they are American citizens, making it impossible for the federal government to know the size of the citizen population versus the immigrant population.

The article explains why this question is significant:

Kansas Secretary of State Kris Kobach has noted the citizenship question on the census is necessary to further implement congressional apportionment based on the citizen population rather than the current rules that base state representation on the total population — including ocitizens, illegal alien residents, legal immigrants, and nonimmigrants on visas.

Should congressional apportionment be based on the number of American citizens in each state — which is only possible through asking the citizenship question on the census — Democrat-strong coastal areas with large foreign populations like California and Florida could lose representation, while states with small foreigon populations like Wyoming and Ohio would likely gain representation in Congress. Such a rule change would shift power from coastal states to the heartland of the country, Breitbart News reported.

Keep in mind that there are some serious philosophical differences in the politics of the elites in Washington (combined with the elites in coastal America) and the average American living in the mid-west.

Congress has been discussing illegal immigration since the 1980’s. Why hasn’t the issue been resolved? It’s a matter of viewpoint–the Democrats see illegal immigrants as future citizen voters–the corporate Republicans (the non-conservative, country-club Republicans) see cheap labor.  Until we elect Congressmen who are willing to see the problem of having millions of people in the country who are not contributing to Social Security or taxes yet are receiving government benefits, we will continue to have the problem of a large population of illegal immigrants. They do not have the right to represented in Congress–they are not citizens,

The question belongs in the 2020 Census, but I sincerely doubt it will be there.

 

Ugly Rears Its Head In The House Of Representatives

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Sometimes dumb ideas come from Republicans as well as Democrats. I am about to illustrate that fact. Yesterday Representative Ted Deutch of Florida introduced H.R. 7173 into the House of Representatives. The bills description is, “To create a Carbon Dividend Trust Fund for the American people in order to encourage market-driven innovation of clean energy technologies and market efficiencies which will reduce harmful pollution and leave a healthier, more stable, and more prosperous nation for future generations.” Never trust the government to create a trust fund–remember the Social Security Trust Fund–it was robbed during the 1960’s (by the government that created it).

Let’s talk about this trust fund for a moment.

The bill states:

“A carbon dividend payment is one pro-rata share for each adult and half a pro-rata share for each child under 19 years old, with a limit of 2 children per household, of amounts available for the month in the Carbon Dividend Trust Fund.”

Do you really want the government commenting or being involved in any way with how many children you have in your family?

The Hill posted an article yesterday about the bill. The article included the following:

…the bill would charge companies when they produce or import fossil fuels like coal, oil and natural gas, based on their expected greenhouse gas emissions.

But instead of using the money to pay for health or community projects, the new bill would distribute it to the public. Its backers say those “dividends” would offset the increased costs from the carbon tax, like higher utility and gasoline bills, for about 70 percent of households.

Dividend funds would be handed out by the Treasury Department under the bill, based on the number of people in a household.

“It’s transparent and easily trackable. You know where the money is going. It protects the American family so that families are not adversely impacted. Dividends would protect most families from cost increases,” Ben Pendergrass, senior director of government affairs at Citizens’ Climate Lobby, told The Hill.

“The market signals should still be there to guide things like fuel efficient cars and dividends protect people who can’t make that transition immediately.”

The bill would also prohibit the federal government from regulating greenhouse gas emissions from the sectors that are taxed, unless the taxes aren’t effective after 10 years. That is an effort to attract support from Republicans, who are nearly united in opposition to Environmental Protection Agency climate regulations.

Rooney focused on the economic benefits of the bill, saying in a statement Wednesday that the revenue carbon neutral fee is good policy and a way “to support emerging alternate sources of energy.”

This bill is a really bad idea. It paves the way for more government intrusion into our private lives and takes more money from Americans. America has cut its greenhouse gas emissions without crippling our economy. We are quite capable of doing so in the future without stifling economic growth and creating even bigger bureaucracies.

 

Choosing Winners And Losers

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Fox5 is reporting today that Amazon has decided to open two new facilities–one in Alexandria, Virginia, and one in Long Island City, New York.

The article reports:

New York state is kicking in more than $1.5 billion in taxpayer-funded incentives for getting half of Amazon’s second headquarters located in a section of Queens.

The Seattle-based company made its long-awaited announcement Tuesday, saying Long Island City and Alexandria, Virginia, will each get 25,000 jobs. The online retailer also said it will open an operations hub in Nashville, creating 5,000 jobs.

…New York state’s incentives are nearly triple those of Virginia’s, while Tennessee’s are $102 million.

According to Amazon, the cost per job for New York taxpayers is $48,000, compared to $22,000 for Virginia and $13,000 for Tennessee.

In a statement released by Amazon, Cuomo called the agreement “one of the largest, most competitive economic development investments in U.S. history.”

I have a few questions. How many years will these tax incentives last? Will Amazon leave the state when the incentives end? If each job cost New York taxpayers $48,000, how much do these jobs pay? The company is getting tremendous tax breaks to come to New York and create jobs, can New Yorkers afford the increases in their taxes to pay for those jobs? Wouldn’t it be better to cut taxes for all businesses in New York and make the state more attractive to businesses looking for a place to relocate? Lowering taxes across the board actually increases revenue, choosing winners and losers simply makes people angry.

The Problem With Taxes In America

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Walter Williams, a professor of economics at George Mason University, posted an article at The Daily Wire today about taxes.

Professor Williams noted a few things about taxes in America:

The argument that tax cuts reduce federal revenues can be disposed of quite easily. According to the Congressional Budget Office, revenues from federal income taxes were $76 billion higher in the first half of this year than they were in the first half of 2017. The Treasury Department says it expects that federal revenues will continue to exceed last year’s for the rest of 2018. Despite record federal revenues, 2018 will see a massive deficit, perhaps topping $1 trillion. Our massive deficit is a result not of tax cuts but of profligate congressional spending that outruns rising tax revenues. Grossly false statements about tax cuts’ reducing revenue should be put to rest in the wake of federal revenue increases seen with tax cuts during the Kennedy, Reagan and Trump administrations.

A very disturbing and mostly ignored issue is how absence of skin in the game negatively impacts the political arena. It turns out that 45 percent of American households, nearly 78 million individuals, have no federal income tax obligation. That poses a serious political problem. Americans with no federal income tax obligation become natural constituencies for big-spending politicians. After all, if one doesn’t pay federal income taxes, what does he care about big spending? Also, if one doesn’t pay federal taxes, why should he be happy about a tax cut? What’s in it for him? In fact, those with no skin in the game might see tax cuts as a threat to their handout programs.  (The underline is mine.)

The above information might explain why Democrats keep getting elected despite their overtaxation and reckless spending (yes, I know the Republicans also overspend).

The article concludes:

Another part of the Trump tax cuts was with corporate income — lowering the rate from 35 percent to 21 percent. That, too, has been condemned by the left as a tax cut for the rich. But corporations do not pay taxes. Why? Corporations are legal fictions. Only people pay taxes. If a tax is levied on a corporation, it will have one or more of the following responses in order to remain in business. It will raise the price of its product, lower its dividends to shareholders and/or lay off workers. Thus, only flesh-and-blood people pay taxes. We can think of corporations as tax collectors. Politicians love our ignorance about this. They suggest that corporations, not people, will be taxed. Here’s how to see through this charade: Suppose a politician told you, as a homeowner, “I’m not going to tax you. I’m going to tax your land.” I hope you wouldn’t fall for that jive. Land doesn’t pay taxes.

Getting back to skin in the game, sometimes I wonder whether one should be allowed in the game if he doesn’t have any skin in it.

It’s time to insure that everyone has some tax burden so that they will consider that burden when they vote.

The Real Numbers vs The Propaganda

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Guy Benson posted an article at Townhall today about taxes.

The article includes the following:

Democrats already have a well-worn, and misleading, talking point about it: 83 percent of the tax cuts go to the wealthiest 1 percent. That’s true for 2027 but only because most of the individual income tax changes expire by then…The important missing context is that the final tax legislation, which President Donald Trump signed into law Dec. 22, allows most of its individual income tax provisions to expire by 2027, making the tax benefit distribution more lopsided for the top 1 percent than in earlier years. In 2018, according to an analysis by the Tax Policy Center, the top 1 percent of income earners would glean 20.5 percent of the tax cut benefits — a sizable chunk, but far less than the figure that’s preferred by Democrats. And in 2025, that percentage would be 25.3 percent, with the top 1 percent (those earning above $837,800) getting an average tax cut of $61,090. Just two years later, in 2027, the percentage of tax benefits to this income group jumps to 82.8 percent, “because almost all individual income tax provisions would sunset after 2025,” explains TPC. 

The article explains who pays income taxes:

The much-maligned top one percent paid more than 37 percent of all federal income taxes that year, which is the most recent on record for which we have data.  The top three percent footed just over half of the total federal income tax bill.  And those in the top five percent were responsible for paying nearly 60 cents of every federal income tax dollar collected by Uncle Sam.  If you look at the black lines on the bar graph above, you will see that the federal income tax share paid by “the rich” far outpaced their respective portions of the nation’s overall earnings.  The bottom half of US earners — 50 percent of the country — paid approximately three percent of all federal income taxes in 2016, slightly less than the contributions of the top .001 percent alone.  The Left’s political stories about “fair shares” and “millionaires and billionaires” may pack a potent rhetorical punch in the service of fueling grievance politics and class warfare, but they’re not grounded in facts and omit crucial perspective.  It’s worth noting that in the latest NBC/WSJ poll, the GOP holds a record-high 15 point lead over Democrats on the economy.

It really is time to consider a flat tax, where deductions are very limited and everyone pays the same percentage. Our current tax code is demotivational–it does not encourage prosperity. However, in reality we need to fix the spending–that will eventually fix the tax code.

 

Going Against Conventional Wisdom

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Yesterday Breitbart posted an article about a recent study of which states are the wealthiest and which are the poorest. Then Breitbart compared those results with the voting records of the people in those states. The results were surprising.

The article reports:

Democrats paint themselves as the party looking out for the little guy and more interested than Republicans in representing the poor and their best interests.

But according to Ken Fisher, the founder and executive chairman of Fisher Investments, best-selling author and one of the richest men in the United States, a USA Today study released earlier this month that shows the economic profile of all 50 states, ranked by household income, reveals much more.

When Fisher read what he called “a breathtaking economic profile” of the states he found in it something that was “embedded” in it that reveals what he believes is “arguably the greatest unseen political truth of our time.”

This is the surprising correlation:

USA Today headlined its story reporting on its findings: “Wealth in America: Where are the richest and poorest states based on household income?”

But Fisher headlined his commentary about the study published in USA Today on Sunday: “Midterms: Poorest states have Republican legislatures, and richest have Democratic ones.”

“Fathom it, and you will see how politics may unexpectedly affect economics and wealth for years to come,” Fisher wrote.

The article points out that the five richest states have legislatures controlled by Democrats. He doesn’t mention that those states also have some of the highest tax rates in the country. Those states are Maryland, New Jersey, Hawaii, Massachusetts, and Connecticut.  According to an article at Wallet Hub, a website that ranks states according to tax rates, Maryland ranks 44th, New Jersey ranks 47th, Hawaii ranks 51st, Massachusetts ranks 45th, and Connecticut ranks 49th in the list of states with the lowest tax rates. Yes, I know there are not 51 states, but the District of Columbia was included in the list.

I guess you have to move to a state with a legislature controlled by Republicans if you want lower taxes.

But It Sounds So Good

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On Wednesday, Investor’s Business Daily posted an editorial about the cost of free stuff. Yes, you read that right.

The editorial reports:

In a devastating piece that appeared on the left-of-center web site Vox (to its credit), Manhattan Institute fellow Brian Riedl went through the simple math of what free actually costs. It’s a lot.

It’s not just the free aspect, but the fact that the democratic socialists have made so many promises that must be paid for that will make it so tough to swallow for most voters.

Riedl looked at the 10-year costs of all the various promises made by Bernie Sanders, Alexandria Ocasio-Cortez, and other self-described democratic socialists. He was as generous as could be in his estimates, often accepting the democratic socialists’ cost estimate even when it was patently and absurdly too low. It’s quite a laundry-list of promises with enormous costs: “Free college” ($807 billion); Social Security expansion ($188 billion); single-payer health care ($32 trillion); guaranteed jobs at $15 per hour plus benefits ($6.8 trillion); infrastructure ($1 trillion); student loan debt forgiveness ($1.4 trillion).

Net cost: about $42.5 trillion over 10 years, give or take a few hundred billion. To paraphrase the late, great Republican Sen. Everett Dirksen: “A trillion here, a trillion there, and pretty soon you’re talking real money.”

I wonder if the young people who support socialism understand how much it costs.

The article reminds us that our spending is already out of control:

As it is, current federal estimates expect about $44 trillion in tax revenues over that same period, with a deficit of roughly $12.4 trillion. Remember: All this democratic socialist spending comes on top of what we’re already spending.

Please consider this when you vote. If you want the government to take less of your money, the only hope you have (although it is a small hope) is to vote Republican.

The Economic Impact Of Tax Cuts

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First of all, let’s take a short walk down memory lane to a Washington Post article from November 20, 2017.

The article explains how the Democrats plan to use the tax cut plan in the 2018 mid-term elections:

The goal of the ads will be to hit two messages. The first is that the GOP changes to the tax code themselves would be enormously regressive, showering most of their benefits on the wealthy while giving crumbs to working- and middle-class Americans or even raising their taxes. The second is that these tax cuts would necessitate big cuts to the safety net later — the ad references $25 billion in Medicare cuts that could be triggered by the GOP plan’s deficit busting — further compounding the GOP agenda’s regressiveness down the line.

Geoff Garin, a pollster for the Democratic super PAC Priorities USA, tells me that his polling shows that this combination alienates working-class whites, particularly Obama-Trump voters. “They are fundamentally populist in their economic views, and they find big breaks to corporations and the wealthy especially heinous when the flip side of that means cutting Medicare and Medicaid,” Garin said.

That was the original plan. Now lets look at an article posted yesterday in The New York Post about the results of the tax cut plan.

The New York Post reports:

We are already starting to see a fiscal dividend from Trump’s pro-business tax, energy and regulatory policies. The Congressional Budget Office reports that tax revenues in April — which is by far the biggest month of the year for tax collections because of the April 15 filing deadline — totaled $515 billion. That was good for a robust 13 percent rise in receipts over last year. ‎

…But there’s another lesson, and it’s about how wrong the bean counters were in Congress who said this tax bill would “cost” the Treasury $1.5 trillion to $2 trillion in most revenues over the next decade. If the higher growth rate Trump has already accomplished remains in place, then the impact will be well over $3 trillion of more revenue and thus lower debt levels over the decade.

Putting people back to work is the best way to balance the budget. Period.

The article concludes:

No one thought that Trump could ramp up the growth rate to 3 percent or that his policies would boost federal revenues. But he is doing just that — which is why all that the Democrats and the media want to talk about these days is Russia and Stormy Daniels.

I want to go back to the original Democrat statements about the damage the tax cuts would do to the economy. Did they really believe that or do they simply want more of our money under their control? Either way, it doesn’t say good things about them–either they don’t understand economics (see the Laffer Curve) or they lied. Obviously they have to continue lying if they want to use the tax cuts as part of their mid-term election campaign–they have already stated that they want to rescind many of the tax breaks that have resulted in the recent economic growth.

If you are inclined to vote on pocketbook issues, the only choice in November is to vote for Republican candidates for Congress.

Bad Decisions Based On Faulty Premises

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There are still some legislators that believe raising taxes increases revenue. Up to a point it does, but only up to a point. At a certain level, increased taxes result in people finding creative ways to avoid those taxes.

Hot Air posted an article yesterday about a proposed tax increase in the Rhode Island 2019 budget. The proposal would levy an 80 percent wholesale tax on all vapor products and related equipment in the state. There was an attempt to include this tax in the Rhode Island 2018 budget, but the attempt failed.

The article reports:

The tax would effectively label electronic nicotine delivery systems as tobacco products, despite containing no actual tobacco. Vaping advocates argue the tax will harm overall public health in the state by cutting off former smokers’ access to vapor products. They also note the proposal will fail to boost state revenues due to diminished sales, coupled with consumers crossing into neighboring states to buy their vapor products.

Rhode Island is a relatively small state–you don’t have to drive too far to cross into another state. That is what people will probably do to avoid this tax.

The article lists the problems with the proposal:

First, these are not tobacco products. The state plans to tax them under the same category, despite the fact that there is no tobacco involved in the process. Further, the tax applies to the equipment used to “vape” the liquid nicotine. Compare that to the tax system applied to tobacco. Even the worst sin taxing states haven’t tried applying that sort of a penalty to buying a pipe.

Next, as noted above, the damage to the nascent vaping industry will be epic just as it was in Pennsylvania when they instituted a 40% tax. After the tax went into effect, more than one hundred new businesses shut down just in the greater Philadelphia region.

In terms of health, not only will this likely push people who managed to quit cigarettes by switching to vaping back to tobacco, but new vapers who have probably developed a habit may feel compelled to go try smoking cigarettes for the first time. Rather than allowing this new technology to continue to help people quit smoking, a tax such as this will likely lead to the opposite effect, creating a new generation of smokers who find it more economically practical to light up rather than vape.

And finally, in terms of raising revenue for the state, this scheme never works. Every time states push for a big new sin tax on tobacco it blows up in their face and that’s what going to happen to a vaping tax as well. In 2016, New York State actually lost a half billion dollars in tax revenue on tobacco rather than seeing an increase.

This is a picture of the Laffer Curve:

The Laffer Curve is simply a representation of how human nature responds to increased taxes. When taxes reach a certain point, people begin to look for ways to avoid them, and tax revenue goes down. That is exactly what will happen if the tax on vapor products and equipment in Rhode Island becomes law. People will make the trip to neighboring states rather than pay the increased tax. As an unintended consequence, the vaping industry in Rhode Island will be destroyed, and more people will make the trip to Foxwoods to buy cigarettes to avoid the cigarette tax.

Eliminating A Tax Break That Only Benefits The Rich

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The class warfare that surrounds tax reform is bothersome. It’s not constructive and most of the information is false. The reason some tax cuts appear to benefit the rich is that the rich pay 80 percent of the taxes. They are the ones who need tax breaks. However, there is one tax break that generally impacts the rich that may disappear if the tax code is truly reformed.

Yesterday The Daily Signal posted an article about the elimination of the deduction for state and local taxes. The article explains how this deduction impacts the residents of California:

Yes, California has high state income taxes. For instance, the rate for millionaires is 13.3 percent. It’s not insanely lower for the middle class, either: A married couple making $103,000 or more would pay a 9.3 percent rate, and while $103,000 might go far in plenty of areas in the United States, California’s outrageously high housing prices ensure that such a couple wouldn’t have an easy time paying all the bills.

But those Hollywood liberals raking in the big bucks and paying the 13.3 percent rate? Well, they’re not actually paying the 13.3 percent rate, thanks to our current U.S. tax code, which allows deduction for state and local taxes.

Let me explain. Currently, if anyone files taxes with itemized deductions, he can deduct his state and local taxes. In other words, if Joe Random makes $250,000 a year, and pays $26,000 in state and local taxes, and then donates an additional $14,000 to charity annually, he could deduct $40,000 from his salary—and pay federal taxes on only $210,000.

This deduction has big benefits for wealthy Californians. According to The Heritage Foundation’s research, that deduction means the effective tax rate for rich lefties in the Golden State is 8 percent, not 13.3 percent.

Essentially the rest of the country is subsidizing California’s high tax burden.

The article further reports:

Furthermore, for individuals pulling in over $200,000 a year, the average benefit of the state and local tax deduction is $6,296, according to Heritage research. For those making in the range of $40,000 to $50,000, that benefit shrinks to $134.

And it’s not just California whose blue-state government is currently raking in the perks thanks to the tax code.

“Just seven states receive 53 percent of the value of the state and local tax deduction: California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut,” write Rachel Greszler, Kevin D. Dayaratna, and Michael Sargent in their upcoming report for The Heritage Foundation.

Why should Americans from red states and lower-tax blue states be subsidizing other states? If states like California want to embrace big government, that’s fine—but they should also have to finance it themselves, not ask for a handout from the rest of the country.

Ending the deduction for state taxes would help make the income tax more equitable for everyone. There will be loud cries from the states it will impact, but it still needs to be done. Hopefully the Republicans will have the courage to do it.

More Free Stuff The Taxpayers Can Pay For

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Congratulations. Today is April 15th, Income Tax day. Tax Freedom Day this year is April 24th. Tax Freedom Day is the day Americans stop working to pay the government and begin working to pay themselves. The tax code has become so ridiculous that many Americans use a computer program or an accountant to file their taxes. TurboTax and other tax services profit mightily because of our ridiculous tax system. The Tax Code is a tribute to the lobbying efforts of special interests. It is the crowning achievement of the Washington establishment.

Meanwhile, Washington wants to make it better. The American Thinker posted an article today stating that Senator Elizabeth Warren wants to make filing your taxes free for Americans.

The article reports:

Sen. Elizabeth Warren says taxpayers shouldn’t have to pay for tax software. She has the support of other liberal Democrats. She has introduced a bill that would require the IRS to make available a “free” online filing option to some taxpayers. She doesn’t mention that taxpayers will have to pay for the development and continuing maintenance of this system through higher taxes. So it won’t be free. Rather it will be a system the cost of which is hidden in the fine print of the federal budget. Never mind that TurboTax and other software companies now offers a no-cost option for a majority of taxpayers. Sen. Warren says TurboTax keeps it secret: a secret known only to the 3 million people who use it and to millions of others who know about it but choose not to use it. The IRS website has a direct link to the free software. The various software companies also have links from their websites. Wouldn’t it be simple if Sen. Warren were to promote the existing free system? Who believes that a system developed by the IRS would be easier to use?

At least TurboTax and other private businesses have an interest in protecting the taxpayers’ identity. Recent testimony on Capitol Hill indicates that the federal government is not doing a very good job of that.

The article concludes:

Senator Warren also wants the IRS to send some taxpayers a “completed” federal return which the taxpayers can sign and file. You can be sure that there will be no promise that the taxpayers who accept this option will be exempt from subsequent audits that can lead to additional taxes, penalties, and even prison. Who believes that the IRS will work to minimize the taxes on the returns it prepares? Will the IRS encourage contributions to Individual Retirement Accounts? Will the IRS help taxpayers avoid ever increasing penalties imposed on taxpayers by ObamaCare? Will the IRS recommend investing in tax-exempt bonds to save taxes? What about itemized deductions?

I don’t think anyone believes that the IRS will adapt to a role where it advocates for taxpayers in place of its traditional role of tax enforcer and collector.

When will Americans learn that nothing from the government is free? The government has no money except that which it takes from Americans. We need to realize that before we are totally bankrupt.

The Problem Is Not The Revenue–It’s The Spending

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CNS News posted a story today stating that the federal government raked in a record of approximately $2,883,250,000,000 in tax revenues through the first eleven months of fiscal 2015 (Oct. 1, 2014 through the end of August), according to the Monthly Treasury Statement released Friday. This equals approximately $19,346 for every person who was working either full or part-time in August.

The article further reports:

Despite the record tax revenues of $2,883,250,000,000 in the first eleven months of this fiscal year, the government spent $3,413,210,000,000 in those eleven months, and, thus, ran up a deficit of $529,960,000,000 during the period.

…The largest share of this year’s record-setting October-through-August tax haul came from the individual income tax. That yielded the Treasury $1,379,255,000,000. Payroll taxes for “social insurance and retirement receipts” took in another $977,501,000,000. The corporate income tax brought in $268,387,000,000.

The chart below is an illustration of America‘s spending problem.

The article also noted that under ObamaCare new taxes took effect in 2013.

Excessive spending is a problem that Washington has no incentive to fix. It is up to the voters to give them an incentive–fix this or we vote you out of office!

 

The Truth In A Chart

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Received in my email from a friend:

Below is a brief summary chart of what the Obama regime has really done to our great nation.

1.    Our national debt rose 80% to over $18 trillion.

2.    Our population rose 17 million, but the number of taxpayers only went up 9 million, the workforce rose only 4 million,  13 million desperate people stopped looking for work and dropped OUT of the workforce because jobs don’t exist (millions applying for and getting designated as ”disabled” so they don’t starve) and actual unemployment rose 4 million.

3.    The “food stamp” president, Obama,  has seen recipients rise 16 million (almost as much as the 17 million population increase!) to 46 million. Those living in poverty rose 16% to 44 million and US manufacturing jobs dropped from 19 to 12 million since 2000.  Why?  Because our highest-in-the-developed-world corporate tax rate of 35% is driving jobs out of our country as fast as corporations can legally incorporate off shore to maximize profits and survive.

graphofWorkforceThis, my friends, is where we are.

T

Why Congressional Investigations Can Take A Long Time

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It seems that there have been so many scandals involving the Obama Administration and Hillary Clinton that it is hard to keep track. After a while it seems as if the investigations never seem to end. Well, there’s a reason the investigations seem to drag on–sometimes the information needed to conduct the investigation can be hard to get.

The Hill reported yesterday that thousands of emails from Lois Lerner have magically appeared.

The article reports:

The Treasury inspector general for tax administration (TIGTA) said it found roughly 6,400 emails either to or from Lerner sent between 2004 and 2013 that it didn’t think the IRS had turned over to lawmakers, the panels said. The committees have yet to examine the emails, according to Capitol Hill aides.

…But a spokesman for Senate Finance Committee Chairman Orrin Hatch (R-Utah) said the committee hoped the new emails would bring the panel closer to releasing the findings of its IRS investigation. Committee aides have said the panel was close to finishing its report when the IRS said it couldn’t locate the Lerner emails last year.

“These emails will be carefully examined as part of the committee’s bipartisan IRS investigation,” the spokesman said. “After TIGTA produces their report regarding the missing data later this year, the Committee hopes to follow suit and move forward with the release of its bipartisan report on this issue.” 

If the IRS had produced the emails when they were originally asked to, the investigation would be over. I also can’t help wondering if the emails have been tampered with in any way.

It’s All In What You Name The Bill

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On Tuesday Time.com posted an article about the Transparent Airlines Act, which had just passed in the House of Representatives. The law allows airline ads to exclude government fees. Therefore the consumer could easily be misled as to how much his flight will cost.

The article reports:

As MONEY’s Brad Tuttle reported in April, $61 dollars of a typical $300 flight comes from federal taxes–20% of the overall ticket price. Under the new law, airlines could ignore that portion of the fare and advertise the same flight at $239. Could anyone actually buy that flight for $239? Of course not.

One argument by those who favor the law is that it will allow consumers to see exactly how much government fees add to the price of airline tickets. That may be true, but when I buy an airline ticket, I want to know exactly how much it will cost me–not a number that may actually be 20 percent less than the actual cost.